Compare Business Bank Accounts for Startups

To open a start up business account, you will need to show proof of your identity and address, and supply a few details about your business.

The level of information required depends on the provider and your business structure and type, but it might include:

• Proof of identity, such as your full driving licence or valid passport.
• Proof of address, such as a recent utility bill or bank statement.
• Contact details, including phone number and email address.
• Business trading name and contact details.
• Information about your main business activity and if you trade overseas.
• Projected turnover for the next 12 months.
• The number of employees and their employment status.
• Company registration number and tax identification number.

Some start up business bank accounts currently offer overdraft facilities, subject to approval.

A business overdraft lets you access funds up to a limit, even after the account balance falls to zero, but you will be charged interest on the amount of credit borrowed. You may also be charged business overdraft fees, including an arrangement fee or annual fee, or a penalty if you borrow more than your arranged limit.

To arrange an overdraft, you will need to meet the provider’s eligibility criteria, such as a minimum trading time, and a good credit history for your business and its directors.

Check the fees and terms carefully before you start using an overdraft and consider there may be cheaper ways to borrow money.

» MORE: Small business grants and support available

The time it takes for applications to be approved can depend on your circumstances. Some online-only providers may offer a decision within just 10 minutes, while for others it could take a number of weeks.

If there are any extra verification checks needed, or if there is an overall increase in applications at a particular time, this may affect how long it takes.

Some business accounts currently offer ‘free’ banking for start ups, and don’t charge a monthly or annual business banking fee. They may, however, charge you for carrying out certain transactions, such as transfers in and out. If your start up is unlikely to require many transactions, this could be a cost-effective option.

If, however, you are likely to make frequent transactions, it may work out as better value to pay a monthly or annual fee if you get some transactions at no extra cost. Other transactions and services such as international payments may still incur a charge, though.

Many business banking providers offer free banking deals to new customers, for an introductory period only. So bear in mind that monthly charges and fees per transaction may kick in once that period expires.

» COMPARE: Free business bank account deals

Yes, you can switch to another business bank account later, and it is probably easier than you think. Once you’ve chosen your new deal and a switch date, if it is a participating provider, the Current Account Switch Service (CASS) automatically transfers across your balance, standing orders and direct debits, before closing the old account.

The switch should be complete within just seven business days, but your provider will contact you if there are any delays. If you need an overdraft as part of your switch, this must be agreed and in place with your new provider before the switch.

CASS covers over 40 banks and building societies in the UK, but if your old or new provider is not participating in the scheme, ask your new bank how it can help you to switch. If it doesn’t offer a switching service, you may need to run your current business account alongside the new one until you are ready to make the change.

You will need to tell any clients about this change of bank details and update your invoice template, and change stored card details for recurring online payments, but the rest is taken care of.

The benefits of switching can outweigh staying with a provider if you are not happy with increased charges or the level of customer service – or you have seen a better deal that suits your growing business better.

Exactly what you need depends on the provider, but you usually need to show photocard ID as proof of your identity, and confirmation of your UK address. That might be your passport or driving licence and recent council tax or utility bill.

You must also confirm other details, including your legal name, nationality, recent addresses, and your contact information, including your phone number and email address. This applies to each owner, director or partner of the business. Your bank will carry out similar checks on anyone authorised to operate your account, or who owns or controls more than a certain percentage of business shares or voting rights.

When you apply, you need to supply the business name and address, the date it was started, company registration number if it is a limited company or partnership, along with details of any other business bank accounts you hold.

You may also need to provide some financial information about your business, including the main business activity, number of employees, sources of income and investment, expected turnover in the next 12 months and tax status.

You will also be asked how much money you expect to pay into the account in the next 12 months, and how frequent transactions will be.

It depends on the provider. Some banks will generally let you make or receive international payments in a number of currencies. You can do this online, over the phone, or you may need to go into a branch. You will need to give a reference code, such as a BIC, SWIFT or IBAN, which you should be able to find on your bank statement or by logging in to your online account.

Before you make the transfer, check the bank’s upfront transaction and commission fees, and the exchange rate it is charging.

If international transfers are likely to be regular, you may want to consider an account plan that offers free international payments. However, there will usually be a limit set and a foreign exchange charge may still apply.

If you are a start up, you can access government support if you need advice, want help with growing your business, or are worried about debt.

• There are small business grants available to help growing businesses, depending on your region and industry.
• New and growing businesses can apply for a government-backed start up loan of £500 to £25,000, with up to 12 months of free mentoring. (This is a personal loan.)
• The Recovery Loan Scheme is a government-backed scheme helping small businesses access finance to survive and grow, running until 30 June 2024.
• If your company works on innovative projects in science and technology that makes advances in the field, you may be eligible for research and development tax relief.
• You can call a national business support helpline to get free support and advice, and learn about possible sources of finance. There are separate helplines for businesses in England, Wales, Scotland and Northern Ireland.
• If your business took part in the Bounce Back Loan Scheme, your lender may have contacted you about Pay As You Grow. This offers extensions to loan terms, periods of reduced payment and repayment holidays, if needed.

If you are worried about business debt, the British Business Bank offers information about how to manage debt and where to get help in your region.

» MORE: Five reasons to consider a business loan