How to open a business bank account in the UK

27.03.17
6 minute read
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The UK is built on small and medium sized enterprises (SME) - with over 99% of UK companies employing under 250 people. In fact, despite the global economic crisis, the number of businesses registered in the UK grew a massive 55% between 2000 and 2015. Today, on average, there’s one registered business for every ten people.

You’re not legally required to have a specific business bank account if you operate a company in the UK. However, you’ll find it swiftly becomes necessary in order to keep clean accounts. Luckily there are plenty of banking options, and the process is fairly simple.

Here’s how to open a business bank account in the UK.

What types of corporate entities are there in the UK?

The business bank accounts open to you will depend to an extent on the structure and size of your company.

Corporate entities legally accepted in the UK are:

  • Sole Trader
  • Limited Company
  • Business Partnership

There are also legal structures specifically designed for non-profit and social enterprises.

It’s worth noting that the fine detail about business structures varies across the different countries of the UK. Business partnership liabilities, for example, are split differently in England compared with Scotland. If you’re registering a business in the UK, make sure you know the law in the region you’re working in.

Can I open a business bank account in the UK with a foreign corporate entity?

It’s very difficult to open a bank account in the UK for a foreign corporate entity. If you already bank with a large global institution in your home country, you may find that they can help you set up an account with their UK business.

Alternatively, HSBC has a reputation for being willing to help smaller international businesses, but accounts would be offered on a case by case basis.

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What’s the process for opening a business bank account in the UK?

If you hit all the eligibility criteria, then opening a business bank account in the UK is a fairly simple process. In general you'll only be asked to prove your identity and address, with documents such as these:

  • Proof of ID for all named company directors - passport, photo driving license or national ID card
  • Proof of address - recent bank statement or utility bill, or council tax statement.

If you’re applying from abroad, you may be asked to provide notarised translations of your ID and documents used to prove your address.

You'll also need to give details of your company, such as:

  • Full business address (including postcode)
  • Contact details
  • Companies House registration number (for limited companies and partnerships)
  • Estimated annual turnover

In some cases, you'll need to prove your own personal financial situation, with documents to show you have a clean credit and banking history.

Can I open a business bank account as a non-resident?

UK residency isn't legally required to open a business bank account. Banks, however, are wary about working with non-residents because of the extra administration and possible exposure to fraud.

If you don't have any company directors resident in the UK, then an international business account is your best option. However, this comes with a steep minimum deposit so it won’t suit everyone.

If at least one resident director lives in the UK, you'll find that more banks are able to work with you.

Can I open a business bank account from abroad?

If you live abroad and don’t have UK residency you'll find your options for opening a business bank account are limited.

You may be able to open an account with HSBC if your directors can all travel to the UK to meet with a bank representative and present relevant documents. Long term residency isn't necessary for some HSBC accounts, which can then be managed via mobile and internet banking from overseas.

Can I open a business bank account online?

Most high street banks require you to present ID and documentation in person, making it difficult to open a business bank account entirely online. In many cases, you can start the application online or on the phone, but still need to present documents in branch at a later stage.

However, alternative finance products, such as Cashplus business account, are available online. Cashplus specialises in prepaid payment cards, but also offer a product that looks and works like a business bank account, which can be set up entirely via the web. Read the small print carefully though - you'll find the options here more limited than other business banking products on the market.

Which bank should I choose?

The UK has a huge retail and commercial banking sector, which is dominated by the ‘Big Four’:

Santander sits as the fifth largest bank by volume in the UK.

Each bank will have slightly different products available, so read the terms and conditions carefully.

HSBC

HSBC is truly a global bank, with 4400 offices in over 7 countries across the world. In the UK they offer business accounts to limited companies, partnerships, sole traders and charities. Account fees are £5.50 a month but are waived for up to 18 months for new customers.

Barclays

Whatever size business you run, Barclays has an account for you. They work with limited companies, partnerships and sole traders, and with 1444 branches in the UK, you’ll probably find one close by. Account fees are £6 a month, but start-up businesses are able to access fee-free banking subject to conditions.

Lloyds Banking Group

Lloyds offers business accounts to limited companies, partnerships, sole traders and charities, with an annual turnover of up to £1 million. The monthly fee on this account is £6.50, but this charge isn't applied to new customers, who get free banking for up to 18 months.

Royal Bank of Scotland Group

RBS has just under 500 branches in the UK and cover the world through a network of international offices. They have bank accounts aimed at limited companies, partnerships, sole traders and charities. Fees are £6.50 a month, but can be deferred for new customers running small businesses for up to 2 years.

Banking fees and charges

Before you open your business bank account in the UK, it's important to read the small print carefully - especially the section on banking fees and charges.

It’s common to find monthly account handling charges and fixed fees for banking transactions. Even when these fees look small, they can build up over time.

From time to time, most businesses need to make international money transfers - for example, to pay suppliers based overseas. It’s worth paying special attention to the fees applied when you move money or make direct payments between accounts which use different currencies.

Many banks don't offer a good deal to their customers when making international money transfers like this. Often they'll add a high initial ‘admin’ charge for processing the transaction, as well as steep transaction fees. These may be fixed fees or a percentage of the amount transferred.

But even if the listed fees look quite low, your bank will make their cut on the deal. Instead of a transparent, up-front fee, you might find that your bank’s profit is rolled into a poor exchange rate. If your bank applies an exchange rate which is worse than the real, mid-market rate, then you lose out as the true cost of your transfer is higher than it needs to be.

To make sure your bank isn’t taking an extra cut, you’ll want to use an online currency converter to check the actual value of your money before you transfer internationally. If you do make a transfer, you might consider using an alternative service like TransferWise. Not only does TransferWise already offer the true exchange rate you can find on Google, but since your international transfer is made with two local transfers in each respective country, large SWIFT transfer fees are also cut out, leaving you with more money in the end.

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