Get your business off to a great start, and grow it by choosing the right bank account. Whether you’re running a startup and looking for your first business bank account, or simply want to switch from your current provider, the information below will help you compare some the UK’s best business bank accounts for small business, freelancers, contractors and side hustles.
Quick links
Compare business bank accounts for start ups, switchers, freelancers, and contractors
N/A
No fee for 12 months then £69 per year
Yes
available on request
N/A
No annual or monthly fee
Yes
available on request
25 months
£6.50 per month thereafter
Yes
Negotiable
25 months
£6.50 per month thereafter
Yes
Negotiable
None
£12.50
yes
On request
18 months
£7.50
Yes
On request
18 months
£6.50 per month thereafter
Yes
On request
18 months
£10 per month
Yes
£500 at 6.5% APR
Compare business accounts for people with bad or poor credit histories
Regardless of whether you’re a freelancer, contractor, or setting up a limited company, the owners/directors of the the business will need to undergo a credit check when applying to open a new account.
As being turned down often triggers a spiral of rejection, would-be business owners with a checkered credit history should first read our guide on how to open a business bank account with a poor or bad credit history.
Features, cover charges, and fees are comparable with traditional high street business bank accounts, and costs are of course allowable expenses as far as tax goes. We think these accounts are great for small businesses that are just getting their idea off the ground, those with a bad credit history, or business that just need an account in a hurry.
Once your business has a proven set of financials under its belt, there’s nothing to stop you then transferring to a more traditional account if need be. Also see our round up of business bank accounts for bad credit.
N/A
£12.50
No
None
N/A
£12.50
No
None
Our comparison services features a selection of providers we trust and have either reviewed or discussed in previous articles.
Some of these providers pay us a commission when you click through and open an account. This does not affect you or your relationship with the provider, and you will receive the same or better price than going direct.
The ordering of the table reflects both our opinion of the service as well as any commercial agreements.
More about business current accounts
If you are a sole trader you can use your own personal account, but many people still prefer to set up a separate small business bank account. For freelancers and contractors, the ability to easily separate business and personal funds, aids financial planning, and helps make the end of year tax return a less daunting prospect.
While business bank accounts are available from all the usual high-street names, rather than reel off a list of every account possible, we’ve decided to focus on a select few that we believe offer the best combination of value, customer service, and access.
How long does it take to open a business account?
Opening a business bank account with a traditional highstreet bank can take between 5-10 working days, and you may need to attend an interview with the bank’s business advisor. This is usually so that they can get better idea about your business, but also to try and sell you additional products like overdrafts or credit cards. Lloyds Bank tends to be one of the worst for the hard sell, whilst Barclays are seen as being more relaxed. If you do not need or want credit facilities, then make sure you tell the bank up front.
In addition to highstreet banks, there are a number of card-based and digital business account operators. The most widely known are CashPlus, and CardOneBanking. These account offer similar services to regular highstreet banks, but are tailor made to those need a fast effective solution for their businesses. As they don’t typically offer credit facilities, there’s no need for a credit check, meaning these accounts can usually be opened within 24 hours.
Tariffs and fees
If you’re making money, then one thing is for sure, there’ll always be someone who wants a cut of it. Banks are no different. practically all business bank accounts have a standing cover charge of somewhere between £5 per month and £25 per month depending on the size of your business, but what’s more important are the daily transaction fees.
Each account will have its own schedule of fees, covering things like cash deposits, standing orders, ATM withdrawals, and so on. It’s important to factor these fee in when choosing your business account. Some banks such as Natwest, Barclays, and HSBC offer a choice of tariffs based on whether you will primarily be banking online, or whether you’ll be more likely to handle cash.
For example, Barclays’ Mixed Payment Plan is geared towards businesses accepting a mixture of cash and electronic payments. As such it charges 90p per £100 paid in over the counter, and 35p per electronic deposit. In contrast the ePayment Plan has no charge at all for electronic deposits, but a whooping £1.50 per £100 paid in over the the counter. You can see how these charges could quickly add up if you select the wrong plan.
Fortunately, for startups this isn’t usually something you need worry about until after your free banking period (if available).
When free banking isn’t free
Many banks offer a free period for startup businesses, which can be handy when trying to get your fledging company off the ground, but there are certain transactions this won’t cover. Cancelling cheques, CHAPs and foreign payments, banker’s drafts etc… are all usually charged for regardless of whether you have ‘free banking’ or not. Additionally, cash payments and cheques can also be charge for once over a certain amount. As such, the free banking term shouldn’t be a major factor in your final decision.
Useful links
Financial Conduct Authority (FCA) – The UK financial regulator’s website features a mass of useful information from knowing your rights to how to stop unauthorised payments.
Financial Service Compensation Scheme (FSCS) – Find out if your bank is covered by the compensation scheme and get advice on making a claim if necessary.
Financial Ombudsman Service – In the unlikely event that you’re having ongoing problems with your bank, and have exhausted their complaints process, then the Financial Ombudsman is the next step – their website covers everything you need to know about making a complaint.
Money Advice Service – Unbiased government advice on choosing, opening and managing a current account.
Federation of Small Businesses (FSB) – Lobby group and advice service championing small business. Paid membership entitles users to 24 hour business legal advice and insurance against HMRC tax investigations.
