Business Bank Accounts for Etsy Sellers

Getting your Etsy payouts set up properly

Running an Etsy shop is creative, but the money side needs to be tidy, transparent and compliant. If you sell in the UK using Etsy Payments, your takings are deposited into a bank account you link in your shop settings. For most sellers this will be a UK business account in your name or your company’s name. Etsy also reports seller transaction data to HMRC, so accurate details matter. We will walk through what accounts you can use, how to connect them, and which options work best when you sell to customers in the UK and overseas. No jargon, just the key facts so you can pick an account that suits how you trade.

Aim for simple, separate and compliant banking so you always know where you stand at tax time.

Who benefits most from this guide

If you are a UK Etsy seller choosing a first business account, weighing up a switch, or expanding to international customers, this guide is for you. It covers sole traders and limited companies, with practical tips to reduce fees, separate finances cleanly and stay onside with HMRC.

What counts as the right account

A business bank account is an account used solely for your trading. If you run a limited company, a separate business account is required by UK law to keep company money distinct from personal funds. Sole traders are not legally required to hold a business account, but in practice most find it far easier for bookkeeping, professional invoicing and preparing a Self Assessment. Providers like Monzo, ANNA, Starling, Wise and Barclays offer business accounts with features designed for freelancers and microbusinesses, such as invoicing, receipt capture, and tax pots.

Etsy Payments typically charges 4% + £0.20 per transaction and then deposits your net funds to your linked account on your chosen schedule. UK sellers can nominate a UK GBP account or, if you often sell in USD, link an international account to receive USD directly. Keeping your Etsy payouts ring-fenced in a business account helps you track profit, understand costs and prepare for tax season.

How to set up and connect smoothly

Open a suitable account first. For sole traders, popular options include Monzo, Starling and ANNA for their quick onboarding and useful tools. For limited companies, Starling, Barclays and Wise are strong choices with clear account controls. If you sell internationally, Revolut and Wise support multiple currencies, with local details for GBP and EUR and efficient foreign exchange. Note that Revolut funds are safeguarded but not covered by the FSCS.

Once your account is ready, add it in Etsy Payments by entering the exact account name, sort code and account number. Make sure the details match your legal status. If you are a sole trader, use your trading name consistently. If you operate a limited company, link the company’s account rather than a personal one. Double-check your tax information in Etsy, as platforms must report seller data to HMRC, including identifiers and payout details.

You can choose how often Etsy pays out to you. Match this to your cash flow needs. If you regularly sell to US customers, consider linking a USD-receiving solution so payouts land in USD first, then convert when rates are favourable. Services like Grey can provide international account details, helping reduce conversion costs and delays.

Why the right banking setup matters

Clear separation makes bookkeeping faster and reduces mistakes. A dedicated business account means every card purchase and payout is clearly business related, which simplifies tax calculations. It also looks more professional when working with suppliers or issuing refunds. For limited companies, using a business account is not optional - it is critical for legal separation and proper accounting records.

Picking the right provider can also cut costs. Multi-currency support, fair exchange rates and low transfer fees make a difference if you sell abroad. Using the right account for Etsy Payments helps avoid payout hiccups and ensures your details are accurate for HMRC reporting. In short, good banking reduces friction, supports compliance and gives you better control over your cash.

Weighing up the balance

Watchpoints before you click apply

Check fee structures closely. Some providers are largely fee free for UK transactions, while others charge monthly fees or add-ons for invoicing or international transfers. Look at card fees, ATM limits, and FX markups. If you sell globally, compare multi-currency features and whether you get local account details for GBP, EUR and USD. Understand protection too. High street banks and digital banks with UK licences generally provide FSCS protection up to £85,000. Some e-money institutions safeguard client funds but do not offer FSCS cover, which may influence your comfort level.

Accuracy matters for Etsy Payments and HMRC reporting. Ensure your legal name, trading name, bank details and tax identifiers align across Etsy and your bank account. If you change account provider, update Etsy immediately to prevent payout delays. Finally, plan your cash flow. Decide on payout frequency and set aside a tax pot so VAT or income tax is ring fenced and ready when due.

Other routes to consider

1. Sole trader using a dedicated personal account with strict separation - acceptable, but a business account is usually cleaner and more professional.
2. High street business banking from Barclays, NatWest or Lloyds - strong UK presence and FSCS protection.
3. App-first accounts like Monzo, Starling and ANNA - fast setup, tax pots and invoicing features tailored to freelancers.
4. International-friendly options like Wise and Revolut - multi-currency accounts, competitive FX and local details.
5. USD payout solutions such as Grey - receive USD directly then convert strategically to manage fees.
6. Building society or credit union business services - community focus with local support where available.

Common questions from UK Etsy sellers

• Q: Do I need a business account as a sole trader? A: Not legally, but it is strongly recommended to keep finances separate and simplify taxes.

• Q: I run a limited company. Is a business account mandatory? A: Yes. Company funds must be kept separate to meet legal and accounting requirements.

• Q: How does Etsy charge me and pay out? A: Etsy typically charges 4% + £0.20 per transaction and pays your net funds to your linked account on your chosen schedule.

• Q: Can I receive USD payouts in the UK? A: Yes. You can link an international account, for example via Grey, to receive USD directly and reduce conversion costs.

• Q: Is Revolut covered by the FSCS? A: Revolut Business safeguards funds but is not covered by the FSCS. Decide based on your risk tolerance and needs.

How Switcha fits into your decision

Switcha will connect you with the best options for what you are looking for, from simple sole trader accounts to international-ready solutions. We compare features, fees and protections side by side so you can make an informed choice without the guesswork, and switch with confidence when the time is right.

Keep it simple: one account for business income, clear records, accurate HMRC details.

Next steps you can take today

• List your must-have features and monthly budget.
• Decide if you need multi-currency and USD receipt.
• Shortlist 3 providers and check FSCS status and fees.
• Open the account, connect it in Etsy, and set a tax pot.

Important information

This guide provides general information only and is not financial or tax advice. Regulations and fees can change. Always check the latest details with your bank, Etsy and HMRC, and consider professional advice for your specific circumstances.