Tips to Open a Business Bank Account in the UK for your Limited Company

When you run a limited company, the company must be responsible for its own finances. This means that all money must be accurately recorded and made fully traceable at all times.

Although there is no legal need to open business bank accounts for limited companies, in practice, it may prove to be very difficult to trade without one.

Separate business bank accounts for limited companies allow the recording as well as tracing of business income and expenditure. If you are using a personal account for business purposes, you will find it very difficult to separate the company finances from your own. This will confuse you as well as delay the preparations of the annual accounts. It can also delay working out tax liabilities and reporting of business activities to Companies House or HMRC.

How to Open a Business Bank Account

It is relatively easy to open business bank accounts for companies that have UK resident directors as well as shareholders. Most banks offer a wide range of accounts suitable for varied needs. You will need to provide the bank with the incorporation documents, personal ID as well as proof of address of the director(s).

The bank will carry out routine checks on the signatories to make sure that only the correct people can access the account.

If your credit history isn't perfect you may find that you're unable to open an account with some banks. As the first port of call, try the bank that you use for your day-to-day personal banking.

If your credit score is not too bad, shop around to see if any banks have offers for new customers or business only perks.

A number of bank cards

Consider the following aspects when you're looking for a business account:

  • Account charges and account fees;
  • Recommendation from your accountant or other companies in your industry;
  • Option for online banking;
  • Interest rates;
  • Incentives on offer.

Company directors must look beyond the well-known banks and compare their offerings with other available options. There are a few things to remember while creating a business bank account:

Do Not Enter Incorrect Information

Most small businesses and entrepreneurs make the mistake of bringing the wrong paperwork to an account opening appointment. Since the requirement of the banks tends to vary, while booking an appointment, make sure to ask the banking officer of the things you will need to bring at the very first meeting.

Shop Around

Most sole traders use personal accounts for business and in most cases, this is the best option for them. The personal accounts are often free; meaning they are cheaper to have than dedicated business accounts. For limited companies, the business bank accounts are nothing short of a necessity, and company directors are advised to shop around for the best deal. There are price comparison websites that operate in much the same way as they do for insurance comparison. You can check out on these websites to find out which bank is offering better deals and open an account with that bank.

A good place to start is on our sister site QuickFile where we show a comparison for bank accounts and start the application process for you. For more information check out QuickFile Business Banking. Alternatively, you can pick from the selection that Company Wizard offers during the incorporation process.

Just be aware that some banks restrict accounts for business use, so check your terms and conditions beforehand.

Decide on the Cheque Signing Authorities

Most small business owners forget to plan for business cheque signing.

Decide whether the cheques are to be signed by one or two individuals, and who the authorised signatories will be.

Make the decisions well before you are about to open a business bank account; this will help with avoiding the changes later.

Decide on Whether You Need International Banking

You might find that you have a need to send or receive money internationally from time to time. When doing this using a standard bank account you may be charged a fee for using a currency other than GBP. However, there are other tools you can use which are more cost effective.

One such tool is TransferWise, a solution to sending and receiving funds in multiple currencies.

TransferWise website on laptop with TransferWise card

TransferWise boasts low-cost transfers using a real exchange rate, paired with an open and transparent fee. This can be a breath of fresh air compared to some traditional banking solutions who charge you a fee which is only discovered one it has completed.

Summing Up

As a limited company you need to be able to account for every penny that passes through your bank account. This means it can be easier having a separate business account for all of the company's money.

Following the above-discussed tips will help you open a business bank account and launch a successful company.

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