Opening a business bank account is an important step for many small business owners.
For example, if you’re running your business as a limited company, you’re legally required to open a business bank account.
And even if you’re not legally required to open a business account, it could be beneficial to separate your professional and personal finances.
Now you’ve decided to open a business bank account, read up on the steps you need to take and the key things you need to consider.
How to set up a business bank account in 4 steps
Opening a business bank account is similar to opening a current account for your personal finances.
The process is usually quick and simple. Here are four steps to follow to get started:
Step 1: Do your research on business banking
A significant part of opening a business current account is choosing the right option. That’s why it’s important to do your research.
There are different business accounts for different size businesses. For example, bank accounts for sole traders may provide access to free tax support. On the other hand, accounts for larger businesses may have lower fees for higher balances.
Think about what you’re looking for in a bank account. Do you need services like these?
- in-person branch support
- online banking
- access to overdrafts, business loans, or credit
- business savings accounts or joint accounts
- the option to send and receive money from abroad
Although most banks allow you to switch accounts easily, doing your research at the outset could save you time in the long run.
Step 2: Choose your business bank account
After you’ve identified the type of business bank account you need, you can start comparing the different providers.
Remember to look out for details on things like:
- fees
- account restrictions
- customer service
- interest rates
Read our comprehensive guide to the best bank to open a business account to compare products from some of the market’s most popular providers.
Step 3: Start your business bank account application
Once you’ve chosen the account that suits the needs of your business, you’ll need to go through the application process.
This should be straightforward, you’ll just need to make sure you have important information about your business and finances handy.
What do I need to open a business bank account?
You’ll usually just need a few personal details and business documents to get started. If you go completely digital, opening a business account can be a lot quicker.
This is the information that you’ll usually need to open a new business bank account:
- proof of ID
- proof of address
- You may also need to give these details about your business:
- business name and address
- contact details
- Companies House registration number (for limited companies and partnerships)
- estimated annual turnover
- financial situation
What you need to supply will depend on the bank account you choose. Most banks allow you to open a business bank account online, but in some cases you may need to speak to someone over the phone or visit a branch.
How long does it take to open a business bank account?
Once you’ve submitted your application, it could take up to four weeks to hear back from the bank. This is because they have to complete several checks on the information you supply.
The process could be quicker if you apply online or if you’re already a customer with your chosen bank.
Step 4: Get started and use your business bank account
If your application is successful, you can get your business account up and running. First, you could transfer some money so you have balance to work with.
Next, you could start setting up Direct Debits and update your payment details on things like invoices.
Another thing you could do is create some separate pots to manage your money more effectively. For example, you could transfer some money to start a sinking fund so you have money put aside for unexpected expenses.
It’s also worth setting up your online banking and downloading the mobile app while you wait for your debit card to be sent out.
What are your tips for opening a business bank account? Let us know in the comments below.
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