Getting a bank account for your company - Why and how do you do it?

When it comes to starting your own company, strong organisational skills are essential, and this is especially true when it comes to business banking.

Limited Company Vs. Sole Trader: How to open a Business Bank Account

  • Limited Company: Since the money belongs to the corporation, not the director, limited partnerships must have different accounts under the company's name.
  • Sole Trader: If you're a sole trader, it can seem simpler and more straightforward to use one bank account for both business and personal expenses – but as your business grows, deciphering all of your bank statements will become more difficult when it comes to Self Assessment time.

To prevent any confusion and potential issues with HMRC, it's important to keep your personal and business banking separate. To do so, you'll almost always need a separate bank account for your business.

Why do some Banks require you to have a business account?

Many banks would not allow you to use a personal account for your company because it may violate your personal account's terms and conditions. Most business bank accounts have recurring payments, but some have introductory deals like free banking for a certain period of time.

If I'm a sole trader, do I need to open a business bank account?

Setting up a separate business bank account is not necessarily a legal necessity, but it is strongly recommended. As a sole trader, you are directly liable for all of your company profits, and there is no legal distinction between you and your business. When it comes to filing your annual Self Assessment tax return, you'll almost always want to report sole trader company expenses because you want to pay more tax than you have to. You must be able to demonstrate the nature of your business expenditures to ensure that they are all permissible.

Is it necessary for my limited company to open a business bank account?

Yes, in a nutshell. Again, having a dedicated business bank account isn't solely a legal necessity. Your limited company's capital, on the other hand, does not belong to you and must be kept separate from your personal finances.

The money you take from the limited company in wages and dividends is taxed to you directly.

How to open a business bank account in the United Kingdom?

While several major banks do not allow you to open an account online, you should be able to start your application on the bank's website before speaking with a representative in person or over the phone.

Some banks allow you to walk into a branch and make an appointment the same day, but this is not always possible.

What are the requirements for opening a business bank account in the United Kingdom?

  • All designated company directors must have proof of identification (passport, photo driver's licence, or national ID card);
  • Address proof is needed (utility bill, council tax statement, recent bank statement);
  • Company address in its entirety (including postcode);
  • Contact details (Phone number and email address);
  • Registration number with Companies House (for limited companies and partnerships);
  • Annual turnover is estimated;
  • It's also possible that you'll be asked to provide evidence of a clean credit and banking background.

Entrepreneurs can benefit from having a business bank account. However, before you sign up for one, make sure you understand the various forms and that you meet the eligibility requirements. To use many business accounts, you must pay a monthly or annual fee.

Business Accounting and Finance