Formation
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Do I need a business bank account in the UK?
Find out whether your limited company or sole trader business needs a business bank account, when to open one and what documents you’ll need.
By Callum Sommerton8 January 20265 min read
If you run a UK limited company, you must keep its banking separate from your personal banking. The simplest way to do that is to open a business bank account in the company’s name. Aim to open it after incorporation and before you start taking customer payments.
Does a limited company need a business bank account?
A limited company is a separate legal entity, even if you’re its only director and shareholder. Its income belongs to the company. Use a dedicated company account for day-to-day income and spending so you can see what belongs to the business and record any money you pay in or take out.
GOV.UK’s company accounting guidance explains the requirement for separate banking and recommends a business bank account as the simplest way to meet it.
What if you’re a sole trader?
Sole traders generally don’t have to open a separate business bank account by law. Check your bank’s terms before using a personal account for business. A dedicated account can still make it easier to track income and expenses.
Can I use my personal bank account for business
For a limited company, keep company banking separate from your personal banking. For a sole trader, personal-account use depends on the bank’s terms, although a dedicated business account is often easier to manage.
Paying an occasional company expense yourself is different from running all company transactions through your personal account. If you buy something for the company, keep the receipt and record whether the company will reimburse you or owe you the money. Ask your accountant how to record it if you’re unsure.
The same applies when you put your own money into the company: record what the payment represents rather than treating all money as interchangeable.
How to open a bank account for your limited company
Wait until your company is registered. Have your registered company name, Companies House number and certificate of incorporation to hand.
Gather your company and director details. Check what the provider asks for. That may include your registered office and trading address, ID for relevant directors or owners, and details of shareholders or people with significant control.
Know how you’ll use the account. Be ready to explain what the company does, how you expect to get paid and your estimated turnover. Compare fees for the transactions you’ll actually make, especially if you’ll handle cash or pay overseas suppliers.
Apply before your first customer payment. Once the account is open, use its details on invoices and set up any regular company payments from it.
If you’re comparing providers, try the free FOUNDRS Business Bank Account Finder.
Does a dormant company need a business bank account
A company that is genuinely dormant and has no need to receive or pay money may not need to open an account immediately.
Be careful if it already has one. Bank charges or interest can create transactions that affect whether the company qualifies as dormant. Companies House and HMRC also use different definitions of dormancy.
Check Companies House’s dormant company guidance and take advice before assuming that a company with no sales is dormant.
Do you have to pay for a business bank account
Not always. Some accounts have no monthly fee; others charge a subscription or offer a free introductory period. A free monthly plan can still charge for particular transactions.
Before choosing, check the costs of bank transfers, cash deposits, international payments, currency conversion, additional cards and any features you need. If there is an introductory offer, check what happens when it ends.
Compare the cost of your likely usage rather than choosing on the headline monthly fee alone.
How do I choose a business bank account
Start with how your business will use it. A freelance consultant receiving UK transfers may need different features from a shop depositing cash or a company paying overseas suppliers.
Eligibility: does the provider accept your business structure, industry and residency arrangements?
Payments: can you receive and make the payments you need, including cash or overseas transactions?
Accounting: can you connect your software or export useful transaction records?
Access: do you need branch services, multiple users or spending controls for team cards?
Protection: check the legal entity providing the account and whether eligible deposits have FSCS protection. E-money safeguarding works differently.
Borrowing: if you need an overdraft or lending, check availability and eligibility rather than assuming it comes with the account.
Our free Business Bank Account Finder helps you compare options by business structure and priorities, including monthly fees, branch access and accounting software. Always confirm current fees, protection and eligibility directly with the provider before applying.
What should I do once the account is open
Use it consistently for company income and spending. Keep invoices and receipts, reconcile transactions regularly and make sure payments to directors are recorded correctly.
Connecting accounting software can reduce manual work, but you still need to check the records. Our guide to accounting software vs an accountant explains what each can help with.
Keep your company documents organised too. FOUNDRS brings core company information and documents together, while its compliance assistant helps you keep track of company obligations. Banking is one part of getting your company ready to run; a clear record of what happens next matters just as much.
