Which is the best business bank account?

If you’re running a small business or operating as a sole trader, it’s important to control your finances and ensure you’re always getting full value for money. When it comes to choosing the best business bank account, those two factors are important considerations.

For early stage businesses, using a personal bank account might seem a reasonable option. If you run a limited company, you don’t have a choice; you must have a separate business bank account. Sole traders can choose either. But, as your business grows, you’ll find that there are strong advantages in opening a business bank account.

The question then arises, what is the best business bank account for a small business? How do you compare banks and accounts to find which business bank account is best for your circumstances?

There is no ‘one-size-fits-all’ business bank account because every business has different needs at various stages of development. So, in this article, we look at the factors small businesses and sole traders should take into account when researching the best business bank account. Later, we provide a simple comparison of the main providers of small business bank accounts.

Business bank account fees and charges

Like any service, using a business bank account comes at a price. There may be fees for simply maintaining an account, transaction charges, interest charges if you are overdrawn or fees for specific services.

So, comparing headline charges and fees is a useful starting point.

• Does the bank charge monthly fees? Some have no fees or introductory ‘no fee’ periods.

• How many transactions do you expect to put through your account? If you plan a large number of transactions, pay attention to the charges.

• Are you confident that you can avoid ‘going into the red’? If not, look closely at the overdraft limits and charges.

• Will you need any special services, such as international money transfers, and what are the charges?

Branch or mobile services

Depending on the type of business you run, you may feel it is important to have access to a local branch.

• If you handle a large number of regular cash transactions or receive payments mainly by cheque, you will need to make regular visits to pay money in. If your bank doesn’t have a local branch, that could make banking inconvenient and time-consuming.

• If your income and payments are mainly digital, then a mobile or telephone banking service will be sufficient.

Service and support

Although you might only think of a business bank as a necessary requirement, you should take into account the quality and scope of service available.

• Does the bank have a good customer satisfaction rating? Recent high-profile reports showed that some major banks treated small business customers badly.

• Does the bank offer an account management service or access to a small business banker?  You may find it useful to have access to the advice of a small business specialist in the bank, particularly if your business is expanding and you are likely to need additional funding sources.

Business features

One of the most important benefits of opening a business bank account is that you can separate personal and business expenditure, which makes it easier to manage costs and calculate your tax liability.

The best small business bank accounts also offer special services that can make tracking costs and managing your finances even easier. These include:

• Tax calculating tools

• Invoicing services

• Expense categorisation

• VAT returns

• Integration with accounting software

Related: Running a business from a rented property

Choice of business bank accounts in the UK

By reviewing the costs, features and services that are important to your circumstances, you can make an objective assessment of the best business account for start-ups, sole traders and small businesses.

The majority of UK banks offer business account services, but their approaches vary considerably.

The major high street banks offer accounts through their branches, as well as online.

There are also a growing number of ‘challenger banks’ that use financial technology to offer a digital business banking service. These banks include Starling, Monzo, Coconut and Tide. They don’t have physical branches, which could be a problem if your business handles cash transactions.

Compare business bank accounts

As we explained in the first part of this article, there is no ‘one-size-fits-all’ account  that would count as the best business bank account for your business. Below we have listed the small business accounts available from 10 banks, with information on the facilities they offer. You can find out more or apply to open an account by visiting their websites.

Barclays Start-Up Business Account

• Branches - Yes

• Mobile/Online - Yes

• Fee free introductory period - 12 months

• Monthly account fee - £8

• Transaction limits - No

• Business tools - Yes

• Business adviser  - Yes

Visit the website.

Image via Barclays.

Co-operative Bank Business Directplus

• Branches - Yes

• Mobile/Online - Yes

• Fee free introductory period - 30 months (balances £1,000+)

• Monthly account fee - £7

• Transaction limits - Yes

• Business tools - Invoicing

• Business adviser  - Branch support

Visit the website.

Image via Co-operative.

Metro Bank Business Bank Account

• Branches - Midlands/South-East

• Mobile/Online - Yes

• Fee free introductory period - No

• Monthly account fee - Free if balance £6,000+

• Transaction limits - No

• Business tools - Yes

• Business adviser - Yes

Visit the website.

Image via Metro Bank.

NatWest Business Bank Account

• Branches - Yes

• Mobile/Online - Yes

• Fee free introductory period - No

• Monthly account fee - No (charges per transaction)

• Transaction limits - No

• Business tools - Yes

• Business adviser - Yes

Visit the website.

Image via NatWest.

Santander Business Current Account

• Branches - Yes

• Mobile/Online - Yes

• Fee free introductory period - 18 months for start-ups

• Monthly account fee - £7.50

• Transaction limits - No

• Business tools - No

• Business adviser - No

Visit the website.

Image via Santander.

Starling Bank

• Branches - No

• Mobile/Online - Yes

• Fee free introductory period - No

• Monthly account fee - No

• Transaction limits - No

• Business tools - Yes

• Business adviser  - Telephone customer support

Visit the website.

Image via Starling Bank.

Tide

• Branches - No

• Mobile/Online - Yes

• Fee free introductory period - No

• Monthly account fee - No

• Transaction limits - No

• Business tools - Integration with apps

• Business adviser  - No

Visit the website.

Image via Tide.

TSB Business Plus Account

• Branches - Yes

• Mobile/Online - Yes

• Fee free introductory period - 25 months

• Monthly account fee - £5 (free if balance £10,000+)

• Transaction limits - No

• Business tools - No

• Business adviser  - By phone

Visit the website.

Image via TSB.

Virgin Money Business Current Account

• Branches - Yes

• Mobile/Online  - Yes

• Fee free introductory period - 25 months

• Monthly account fee - £6.50

• Transaction limits - £250,000 per annum

• Business tools - Yes

• Business adviser - By phone

Visit the website.

Image via Virgin Money.

Support from Accounts & Legal

Choosing the best business bank account can be challenging. You need to take a lot of factors into consideration, apart from basic costs.

If you would like professional advice on the most suitable account for your business, our small business team can help you look beyond the marketing claims.

To find out more, please contact us on 0207 043 4000 or info@accountsandlegal.co.uk. You can also get a quick, no-obligation accounting quote here.