A plain-English UK guide to choosing the right restaurant business bank account, with documents, FSCS limits, cash handling, and digital vs high street options.
Getting your restaurant banking set up right
Opening the right business bank account is one of the most practical steps you can take before service begins. In the UK, limited companies and LLPs must use a separate business current account because the business is a distinct legal entity. Sole traders do not have a legal obligation to separate funds, but it is strongly recommended to keep records clean and tax reporting straightforward. For restaurants, payments can be fast and frequent, ranging from card takings and delivery-platform payouts to supplier invoices, staff tips and cash floats. A dedicated business account is designed for this workload and can plug into your accounting software, saving time and reducing errors.
A clear banking setup also helps when you apply for lending, switch card providers or bring in a new site. It signals professionalism, shortens audits and keeps HMRC checks simpler. In a sector where margins are tight, that clarity matters.
Who will benefit most
This guide is for UK-based restaurant owners and managers across independent venues, pop-ups, food trucks and multi-site groups. Whether you are a sole trader soft-launching a new concept or a limited company scaling to a second site, you will find practical steps to choose, open and manage a business bank account that fits how you actually trade day to day.
What a restaurant business account really covers
A business current account is your day-to-day hub for takings, bills and payroll. Unlike a personal account, it is built for higher transaction volumes and supports card machine settlements, cash deposits and integrations with tools like Xero, QuickBooks, Sage or FreeAgent. Many providers let you attach receipt photos to transactions and create separate spaces or pots for VAT, PAYE and corporation tax. That means you can ring-fence what belongs to the taxman as sales land, rather than scrambling at quarter-end.
Most UK business current accounts sit within banks protected by the Financial Services Compensation Scheme. For eligible businesses, deposits are protected up to £120,000 per banking group. Limited companies usually have a separate £120,000 business limit, distinct from each owner’s personal protection. Sole traders are treated as one legal person, so the £120,000 limit is shared across their personal and business balances at the same bank. Not every fintech offers FSCS protection, so always confirm whether funds are safeguarded or FSCS-covered.
How to open and manage one effectively
Start by choosing a provider that matches your mix of card and cash. App-first banks are quick to open and often low-fee, which suits card-heavy or delivery-first operations. If you regularly pay in cash tips, floats and weekend takings, compare high street banks or hybrids that offer Post Office or branch deposit services at sensible fees.
Be ready with documents. You will typically need proof of ID for all directors or owners, proof of UK address, business structure details, your registered or trading address, and a Companies House number if you are a limited company. Banks may ask about expected turnover, the nature of your cuisine and service model, tax or VAT registration, and how you handle cash. Digital banks often let you submit everything in-app, speeding up approval.
Once live, connect your account to your accounting software, set up tax pots, and consider separate accounts for operating expenses, marketing and refurbishment. Spreading balances can also help you stay within FSCS limits across banking groups.
Next step: shortlist two digital providers and one high street bank, then request sample fees for cash deposits, card settlements and international payments before you decide.
Why the right choice matters for restaurants
Restaurants see unique payment patterns: pre-theatre rushes, weekend spikes, seasonal gift vouchers and supplier invoices with strict terms. The wrong account can make cash handling costly, reconciliation slow and lending applications harder. The right account removes friction by automating bookkeeping, simplifying VAT management and keeping card settlements flowing reliably.
Understanding FSCS protection matters when you hold large balances, such as refurbishment reserves or VAT accrued over a busy period. Knowing which providers are FSCS-protected, and how limits apply to your legal structure, helps you decide how much to keep with each banking group. Finally, eligibility criteria can vary. If you have non-resident directors or complex ownership, a traditional bank may onboard you faster than an app-only provider.
Pros and cons at a glance
| Option | Key advantages | Potential drawbacks |
|---|---|---|
| Digital business banks (e.g. app-first) | Quick onboarding, low or no monthly fees, strong app features, integrations with Xero and QuickBooks, staff expense cards | Limited cash deposit services, fees per £100 deposited via Post Office or PayPoint, some providers lack FSCS protection |
| High street business banks | Branch access, robust cash handling, wider eligibility, relationship managers, FSCS protection | Monthly fees after any introductory period, charges for deposits and certain transactions, slower onboarding |
| Hybrid setup (digital + high street) | Best of both worlds, route cash to branches and use digital tools for day-to-day | Requires coordination across providers, potential extra admin, need to track FSCS limits per group |
Pitfalls and practical checks
Before you apply, map your cash flow. If you expect frequent cash deposits, check deposit routes and fees per lodgement and per £100. Factor in tip processing and how you will handle floats. Confirm whether the provider offers FSCS protection or only safeguarding, and how that affects your risk appetite. If you are a sole trader, remember your £120,000 FSCS limit is shared with your personal balances at the same bank. Limited companies usually benefit from a separate business limit.
Eligibility is another common stumbling block. Some challenger banks do not support certain structures, and hospitality with high cash volumes may trigger extra questions under anti-money-laundering controls. Keep ID, proof of address and Companies House details handy, and be prepared to explain your cash handling procedures and expected turnover. Finally, review fees beyond the headline monthly price, including card settlement charges, international transfers and the cost of paying in cheques, which still appear in deposits from corporate bookings and events.
Alternatives and smart configurations
- Pair a digital account for day-to-day spending with a high street account for cash deposits.
- Open multiple business accounts to separate operating expenses, tax reserves and refurbishment funds.
- Add a business savings account for emergency cash or planned upgrades.
- Use a multi-currency business account if you buy from overseas suppliers.
- Consider accounts that allow multiple sub-accounts to split takings by site or brand.
- Keep a secondary account with a different banking group to spread FSCS protection.
Frequently asked questions
Q: Do I legally need a business account for my restaurant? A: If you operate as a limited company or LLP, yes. Sole traders are not legally required, but a separate account is strongly recommended for clean records and tax clarity.
Q: What is the FSCS limit for business accounts? A: Eligible business deposits are protected up to £120,000 per banking group. Limited companies usually have a separate business limit. Sole traders share the £120,000 with their personal balances at the same bank.
Q: Can app-only banks handle cash? A: Many offer cash deposits through the Post Office or PayPoint, typically with a fee per deposit or per £100. Heavy cash businesses may prefer a high street bank or a hybrid setup.
Q: Which documents will I need to open an account? A: Expect proof of ID and UK address for owners or directors, business structure details, Companies House number for companies, trading address, contact details and information about turnover and VAT.
Q: Should I run more than one business account? A: It can help. Separate accounts make it easier to ring-fence tax, protect savings within FSCS limits and keep payroll or supplier money safe from overspending elsewhere.
How Switcha supports your decision
Switcha compares UK business banking options and highlights what fits how you trade. We look at fees, FSCS cover, cash handling and integrations, then connect you with the best options for what you are looking for. You stay in control while we simplify the shortlist.
A small change in account choice can make a big difference to margins.
Important information
This guide is general information for UK readers and not financial or tax advice. Banking products change, and eligibility or protection can vary. Always check current terms, fees and FSCS status with providers and speak to a qualified adviser if you are unsure.
Get smarter with your money
Join thousands of people in the UK who are taking control of their financial future
FAQs
Common questions about managing your personal finances
Begin by tracking every expense for one month. Use an app or spreadsheet. No judgment. Just observe your spending patterns.
Cancel unused subscriptions. Cook at home. Compare utility providers. Small changes add up quickly.
Aim for 20% of your income. Start smaller if needed. Consistency matters more than the amount.
Choose reputable apps with strong security. Read reviews. Check privacy policies. Protect your financial data.
Pay bills on time. Keep credit card balances low. Check your credit report annually. Be patient.
Still have questions?
Our team is ready to help you navigate your financial journey
More financial insights
Explore our latest articles on personal finance and money management
