13 Best Business Bank Accounts For Startups: Expert Picks

It takes immense confidence to stray into the world of startups. You should have the best financial services to aid you in making your business renowned. The best tip any successful businessman would tell you is to separate your personal and business finances.

That way, you can easily manage your business and keep track of your expenses. A startup business account is the best way to grow your business and increase its credit limits. It also offers rewards and offers, streamlining the cash flow, and online banking facilities.

This article introduces you to the best startup business bank accounts that offer novel features and efficient fund management systems. If you are a small business owner or a sole trader who dreams of branching into the world of entrepreneurship, you will be intimidated by the various terms and conditions regarding business bank accounts. This article will also simplify the process of business account opening so that you can do it on your own. 

What Is A Startup Business Bank Account?

A startup business bank account is similar to a personal bank account except that it is specifically designed for entrepreneurs or new business owners to manage their business expenses. Just like a normal bank account, you can make deposits, and withdrawals, request a debit card, and manage it using the bank’s portal or mobile app.

However, business bank accounts require a monthly fee and have transaction costs. They also provide financial tools and overdraft options to support new businesses in their initial stage. You can open a startup business account with high-profile banks or online account providers from the bank in person or online. 

Best Startup Business Bank Accounts

Do Startups Need A Business Bank Account?

No law in the UK states that startups must have a business bank account for running a business. However, if you are using a personal bank account for managing business expenses, you might run into some troubles.

They may not be legal troubles, but they can increase your efforts in managing the business finances, which can be done with a click if you own a separate business account. Here are a few reasons why you should open a business account for your startup:

1. Efficient Management of Expenses:

If you run a business using personal bank accounts, your expenses will be all over the place, and balancing your income and expenses will be a very difficult task. If you have a business account that links with accounting software, you can save time and effort in trying to manage your expenditures.

Most business bank accounts in the UK provide a free trial or unlimited access to popular accounting and invoice management software. Several bank accounts now use AI to grab invoices from emails and notifications. 

2. Easy Tax Calculation:

Most sole traders and business owners put in tremendous effort in filing their tax returns. Opening a business bank account will ease the bookkeeping process. Many banks offer precalculated tax returns based on income and expenses transacted through the business bank account.

A business bank account can also help you by separating your personal and business finances. Your tax should not be intertwined with the business taxes as tax can be waived from many business purchases.

3. Credit Score:

A business account can help entrepreneurs and new business owners build their credit scores. Unlike a personal bank account, business bank accounts and business credit cards can help businesses to access finance opportunities.

Having a good credit score can help startups get good loan amounts with lower interest rates and other overdraft facilities. Paying credit and overdrafts regularly can also help businesses earn good credit scores. This credit rating will also enable better tax deductions for certain businesses based in the UK.

4. Requirement by Law:

No laws in the UK that state that sole traders need a business bank account to run a business. Large businesses may need to have a business current account and business savings account for an easy bookkeeping process.

You can use your personal bank account to run a business. However, certain banks do not allow their customers to use personal accounts for managing their businesses. You need to read the terms of the bank before you open an account for business purposes. 

Business Account For Sole Traders

A sole trader is an umbrella term for freelancers, contractors, or self-employed professionals. They operate based on their schedule and timings. A sole trader may or may not own an office or register their service as a business in the UK.

Sole traders can use personal bank accounts for business expenses and receive payments for the services provided The laws in the UK do not state that sole traders are required to open a business bank account. However, to keep personal and business finances separate, sole traders should open a business bank account. 

All the banks listed above provide business bank accounts for sole traders and it helps them efficiently manage their expenses and easily calculate their tax returns. Business accounts provide overdraft and credit facilities.

This helps sole traders build better credit scores, which will enable them to get loans for expanding their business. Having a business account will ease the process of acquiring a business credit card for sole traders and also get additional employee cards if you plan on expanding the business. 

Having separate business and personal accounts will be helpful if you face any internal or external auditing. This keeps your business and personal expenses separate and helps your accountant identify your expenses. Many business bank accounts also provide access to invoicing and receipt management software that helps you better manage your finances. 

Business Accounts For Limited Company

If you have a limited company registered in the UK or a limited liability partnership (LLP) firm, you should have a separate business account for managing your business income and expenses.

However, there are no laws that state you need to have a business savings account. But your business must have a current account when the income should go into and salary and expenses should be paid out.

Even if you are the sole owner or the only employee it is required by law for a limited company to have a business current account. This helps to keep your business and personal finances separate from each other. 

Useful Startup Business Account Features

To get the most out of your business account, you should look for certain features that are listed below. Business current and savings accounts with these features will give you better value for your money invested in them, the fee paid monthly, or for investing your time managing your finances in these bank accounts.

These features may be offered for free or you might have to pay a monthly fee to avail of these features listed below. Be sure to opt for a business account that provides you with if not all, some of these features:

✅Multi-user access to the business account.

✅Integration with popular accounting software.

✅Credit and overdraft facility.

✅Access to credit cards, savings accounts, and saving pots.

✅Overdraft and other financial facilities.

✅Easy access to the account through the bank’s mobile app.

✅24/7 customer support.

✅Invoice management and admin tools.

✅Scheduled payments.

✅Expense management.

✅AI tools to grab receipts and invoices from notifications.

✅Fast withdrawal speeds. 

✅Virtual office address.

✅Support for various types of business.

✅Reminders and notifications.

✅Offers, bonuses, and cashback. 

Which Startup Business Account Should You Choose?

If you ever own a personal business account, you might think it would be better if you opt for a business account from the same bank for fast fund transfers between the accounts, lower account monthly maintenance fees, or to streamline your personal and business expenses. Yes, it does make sense to have a personal and business account in the same bank for efficient fund management. But, you might be missing out on certain features while opting for this route. 

If you are planning to start a business, you should do thorough research before opening a business account. You should never choose an account solely based on convenience.

You should make a list of the business accounts as we have done above and choose the best account that suits your needs and is valued for the fee you pay for its upkeep. Check out the monthly fees, transaction limits, credit facilities, exclusive features, and the rewards offered. 

Always opt for the account with the lowest monthly fees and that offers the maximum free transactions, discounts, offers, online banking experience, and the best customer support.

There might not be a particular bank that excels in all the features listed in the previous sentence. However, try to opt for a business account that strikes the best blend of all the features mentioned above. 

Many banks provide many features such as no monthly fee, low transaction fees, accounting software integration, and many free deals as introductory offers.

Be aware that these features are only valid for a certain period and after the offer period is over, you will have to pay a fee for the services offered. So, try to pick the business account that gives better value for the money you have invested. 

How To Apply For A Startup Business Bank Account?

You can open a business bank account from the branch in person or online depending on the provider.

The information you need to provide also varies depending on the bank or the account provider. However, most of the banks require you to provide details such as:

1. Personal Information: You need to provide certain documents as specified by the account provider to know about your identity. These documents should be issued by the government and should be valid at the time you are providing for opening a business account. Most account providers require you to submit your passport, driver’s license, utility bill, birth certificate, etc to prove your identity and place of residence.
   
2. Company Information: Since you are opening a bank account to manage your business’s expenses, whether you are a sole trader, limited company, or partnership, you need to provide the account provider with details that substantiate the legitimacy of your business. This requires details such as your company’s name, address, employee number, date of incorporation, the service provided by your business, and your business’s annual turnover or projected turnover for the next 12 months. 

Also, Read: Top Small Business Ideas In The UK

Documents Required To Open A Business Account

1. Proof of Identity

Banks may require you to send in the front and back copies of your:

2. Proof of Address

The account providers may ask you for any one or multiple documents listed below to prove your residency address. You need to provide copies of the front and back of the IDs mentioned below or as PDF documents.

3. Partnerships or LLP

If you apply for a business bank account for your partnership or LLP, you need to provide the relevant documents for each partner involved.

4. Charities

If you are applying as a charity, a letter of authority on headed paper listing all trustees to the charity should be sent to the account provider. You also need to include proof of identity documents for each trustee to the charity.

The list of documents accepted may change according to the account provider. You should check the terms of individual account providers to know about the required documents.

5. Business Verification Evidence

Step-by-step Guide On How To Open A Business Account

1. Prepare the relevant documents and information required for opening a business bank account. Details regarding the documents required will be available on the account provider’s website.
2. Select the best business bank account that suits your needs. Evaluate the features offered such as eligibility criteria, account fees, transaction limits, digital banking features, customer support, and the rewards offered.
3. Decide whether to open an account in person at a bank or online. According to your decision, you need to fill in a paper or online application to open an account.
4. After filling in the application, submit it in person at a branch or online in the bank’s online portal or its mobile app. The account provider usually takes about 1 day to 6 weeks to process your application.
5. Banks might need further verification and documents to approve your application for a business bank account. They might ask you to explain the sources of the capital for the business funding or ask you to appear in person at a bank for biometrics integration. You need to comply with the account provider and answer all the questions to successfully open a business bank account.
6. Once your business bank account is approved, you will be intimated about it through your email or the phone number you have provided. You can begin to use it for depositing funds or manage it using the bank’s mobile app. 

How Much Does A Startup Bank Account Cost?

Banks offer startup business accounts to entrepreneurs and new business owners with low annual turnover or no income. These accounts usually offer free banking services for a limited period. Usually, these periods vary from 12 months up to 30 months and depend on the account provider.

Once the free period is over, you will have to pay a monthly fee for maintaining your business account, a transaction fee for any payments after the allowed limits, and a fixed fee for deposits. Take into account these costs when you are considering opening a business account for your startup. 

Managing Finances With A Startup Business Account

Take a look at these tips to effectively manage your startup business with the help of a business account:

1. Open a Business Startup Account: Choose a startup business account from the accounts mentioned in this article that best fits your needs. It should have a low monthly fee, maximum free transactions, online banking and mobile banking features, excellent 24/7 customer support, and credit facilities.
2. Create a Cash Flow Statement: Cash flow means the expenses, profits, and losses encountered while doing business. A business savings account provides you with real-time tracking of every single penny that goes through your account. It will also ultimately help to keep a tab on expenses and reduce overspending.
3. Incorporate Accounting And Invoicing Software: Many account providers and banks provide limited-time access to popular accounting software. This helps new business owners to track their expenses and profits. It also automates the process of finance management by grabbing invoices and receipts from notifications and emails. This software also reduces the effort for tax calculation.
4. Opt For A Business Credit Card: Having a business bank account will help you increase your business’s credit score. This will help you easily fetch loans, overdrafts, and business credit cards. A startup business will benefit highly if it has employee cards which eliminates the effort of reimbursing.
5. Bookkeeping And Tax Returns: A business account eases your and your accountant’s effort in calculating taxes. A startup business account incorporated with accounting software will sort the expenses, profits, and losses to easily calculate the tax to be filed. Apart from that, business accounts and business credit card purchases are eligible for tax dedication. So, owning a business bank account will greatly help your startup in the long run. 

Best Startup Business Bank Accounts: Our Final Thoughts

Exploring the various options available regarding the business bank accounts that satisfy your needs, can increase the chances of your business succeeding. There is no denying the fact that financial institutions like banks play a crucial role in the success or loss of a business.

And new businesses will require all the help they need to succeed in this highly competitive world. A business bank account is a step in the right direction to help you build your business. 

Always choose a business bank account that fulfills your needs and never be ready to conform to the provided options. Meticulous research has gone into creating a list of the best startup business accounts for you to choose from. So, select a business bank account from the list above to start your journey as an entrepreneur and it will help you grow your business worldwide.

Startup Business Bank Accounts: FAQs