In short: A business bank account is an account held in the name of your business. A limited company's money must be kept separate from yours, so in practice every company needs one. Sole traders are not legally required to have one, but it makes records and tax much easier.
A business bank account is one of the first things to set up after you form a company. It keeps business money separate, makes bookkeeping simpler and shows customers you are an established business.
What is a business bank account?
It is a current account held in the name of a business, rather than an individual. For a limited company, the account belongs to the company itself. Payments from customers go in, and business costs, salaries and taxes go out.
Do I need one?
Limited companies. A company is a separate legal person. Its money belongs to the company, not to the directors or shareholders. The law does not name a specific type of account you must use, but the company's money must be kept separate from your personal money. In practice, this means opening an account in the company's name.
Sole traders. There is no legal requirement. You can use a personal account if your bank allows it. However, many banks do not allow business use of personal accounts, and a separate account makes your records and tax return much easier.
Why it matters
- Clear records. You can see business income and costs at a glance.
- Easier tax returns. Your accountant can work from clean statements.
- Director's loan rules. Mixing personal and company money can create a director's loan, which may have tax consequences.
- Professional image. Customers pay a business name, not a person.
- Making Tax Digital. Many accounting tools connect directly to business accounts.
What banks usually ask for
Each bank has its own checks, but you will usually need:
- your company name, number and registered office address
- details of all directors and significant shareholders
- photo ID and proof of address for directors and major shareholders
- a description of what the business does and where its customers and suppliers are
- an estimate of your expected turnover
Some banks may also ask for your articles of association, a business plan, or evidence of trading.
Traditional banks or app-based providers?
- High street banks offer branches, a wide range of services and lending. Opening an account can take longer.
- App-based providers often open accounts quickly online and have simple fees. Check what is covered by deposit protection and whether they offer the services you need, such as cash deposits or international payments.
Eligible deposits with UK-authorised banks and building societies are protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per eligible depositor, per institution. Some e-money providers are not banks, so their accounts may be protected differently. Check before you choose.
If you live outside the UK
Directors and shareholders can live anywhere in the world, but some UK banks find it harder to open accounts for non-resident owners. Expect extra checks and documents. Some providers specialise in accounts for international founders.
Tips for a smooth application
- Make sure your company details at Companies House are correct and up to date.
- Use the same name and address details on every document.
- Have clear, recent ID and proof of address ready for each person.
- Be ready to explain your business simply.
- Compare fees: monthly charges, transfer fees, card fees and cash deposit fees.
How Form My Company can help
Every package gives you the documents banks usually ask for: your certificate of incorporation, memorandum and articles, and share certificates in digital form. Our Certified Package (£450) adds printed and bound copies posted worldwide. Outside the UK? Our Non-Resident Package is built for you, with remote identity checks, and we can provide a Certificate of Good Standing if your bank asks for one.
Frequently asked questions
Does a limited company legally need a business bank account?
The company's money must be kept separate from yours. In practice, that means an account in the company's name.
Can a sole trader use a personal bank account?
There is no legal requirement for a separate account, but many banks do not allow business use of personal accounts. A separate account makes records easier.
Is my business account protected?
Eligible deposits with UK-authorised banks are protected by the FSCS up to £120,000 per eligible depositor, per institution. Some e-money accounts are protected differently.
Can non-residents open a UK business bank account?
It is possible, but some banks find it harder. Expect extra checks, and compare providers that work with international founders.