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Yes, if you own a business you will need a business account, even if you’re a sole trader (running a business under your own name). It’s a legal requirement for limited companies (an officially registered company), and using a personal account for business use is against the T&Cs of almost all banks. The best business account is Tide, it’s got awesome features for businesses and there’s even a free plan too.
Running a business already, or just starting out? Whatever your situation, you’ll need a business account for your business banking – and yes, even if you’re a sole trader (running a business under your own name).
Let’s run through why, and what the best business accounts are.
We’re going to focus on the two main types of business structures, a sole trader business, and a limited company – the two most common types of businesses in the UK.
A sole trader is someone who runs their business under their own name. They’re self-employed, and all the business income is theirs, and so is their debts if there are any.
They would pay Income Tax, which is the same tax as someone who is employed by another company.
With a limited company, the business is independent, and is legally separate from the owners of the business (technically called its own ‘legal entity’). To create a limited company it must be registered with the government.
The owners of the limited company are known as shareholders, and they will own a ‘share’ of the limited company. The amount of shares can vary, if the company has 1 share, and someone owns it, they own 100% of the company. If the company has 100 shares, and someone owns 20 shares, they own 20% of the company.
As a limited company is legally separate from the shareholders (owners), its assets (things of value, like computers), the profits it makes, and the debt (if there is any), are all owned by the company. This means the shareholders have ‘limited liability’, and can’t be personally liable to pay the company debts.
Nuts About Money tip: if you’re a startup, check out our guide to the best business accounts for startups.
Tide is the best option, get £75 with a business account (deposit £100) and £100 with a saver account (deposit £5,000).
Yes. You will need a separate business account as a sole trader. In short, it’s not a legal requirement, but using your personal bank account for business purposes is almost always not allowed by the bank – and it’s simply not worth risking losing access to your money, if your bank finds out and blocks your account. It might take a while to get your money back, and customers might not be able to pay you.
There’s also no need to use your personal bank account, business accounts are great, they’ve got loads of features to help you manage your business finances, and they can even be free.
We’ll cover the best business account options below – and we’ve written more about this topic with our guide: do I need a business account as a sole trader?
Yes, as a limited company is legally independent from its owners (the shareholders), it needs its own bank account (this still applies even if you’re the only shareholder).
If you're using your personal account now, it’s best to switch as soon as you can.
Note: if you own a small business, here's the best small business bank accounts.
Whether you’re a sole trader, or a limited company, here’s the best business accounts:
Get £175 for free
Tide is a super popular business account – with over 10% of all small and medium sized businesses in the UK with accounts, including tonnes of freelancers and contractors (and there’s over 1 million businesses using Tide globally).
It’s an easy to use and straightforward account that is free to open. You simply pay as and when you use it (e.g. a small fee per transaction), and the fees are low overall.
The app itself is great, and although it’s easy to use, it’s packed with features to help you manage your business finances and admin, such as invoice management, expense cards, accounting integrations, admin tools and more.
You can even find loans suitable for your business, and if you’re an in-person business Tide has a range of payment solutions available such as card reader terminals, tap to pay and payment links to take payments.
You'll also get a business savings account with one of the highest savings rates out there, perfect for any extra cash you might have lying around, and you can send money to and from your Tide current account and savings account in seconds whenever you need it.
*Get £75 for free after spending £100 within 30 days, and an extra £100 when depositing at least £5,000 into the savings account and keeping it there for at least 2 months. Use the code NUTSABOUTMONEY when registering to claim your cashback.
• Low cost overall
• High interest rate on savings
• Apply in minutes
• Free debit card
• Great mobile app
• Accounting integrations
• Take payments in-person
• Often quick to open
• 24/7 in-app support
• £1 ATM withdrawal cost
• Can’t receive or hold multiple currencies
• £2.50 fee for cash deposits (or up to 3% through PayPoint)
ANNA is a business account with a few extras. If you’ve got a simple business, this might be the only account you’ll need to manage everything.
You’ll get tools to manage your business finances, such as creating and sending invoices (and they’ll send chasers automatically too), expense tracking and sorting your tax.
Love it, or hate it, the card even makes a Meow sound when you use it. Yes really!
Overall cost: low
Account cost: free to £49.90 (plus VAT) per month
Bank transfer cost: 20p (free on paid plans)
ATM withdrawal cost: £1 (free on paid plans)
Multiple currencies: no
Debit card: yes
Cash deposits: no
Accounting integrations: yes
Save or invest cash: no
Tide is the best option, get £75 with a business account (deposit £100) and £100 with a saver account (deposit £5,000).
Get $100 cashback
Airwallex is a business account for global payments – within one Airwallex account you can send and receive over 20 different local currencies across over 150 countries.
Essentially, you can act like a local business, without having to open an account in every different country you operate in (or receive payments from) – you simply use your Airwallex account, and you’ll have local account details to use for each country.
It’s low cost, and you’ll avoid a range of fees (e.g. currency conversion fees), and transfers are typically the same day, or shortly after.
If your business runs internationally, Airwallex is a great option to manage all your payments.
Overall cost: low
Multiple currencies: Accept in 20+ currencies and pay out in 60+ currencies
Debit card: yes
Cash deposits: no
Accounting integrations: yes
Save or invest cash: no
Get $100 cashback
WorldFirst is well established, and a popular choice for online sellers and importers.
WorldFirst is an excellent business account for businesses operating globally, especially if you’re dealing with suppliers in China, where WorldFirst is a very established option, and used by a lot of businesses – meaning a trusted network where you can benefit from an escrow service and reduce costs by dealing directly with suppliers (which also reduces fraud).
It’s also a very common option for online sellers, as it partners with pretty much every marketplace (e.g. Amazon and eBay), and provides everything you need to receive your money from your sales – which means you could expand into new markets (countries) quickly and easily.
Having said that, it's really suited to all types of businesses, and if you’re looking to send or receive money in a different currency, it’s a top option – especially as there’s no ongoing monthly fees. Instead, you pay a fee per transfer (or sometimes no fee at all).
The website and app is easy to use, and you can benefit from team management features, alongside issuing cards for spending.
There’s also advanced features to help you reduce the fluctuation of multiple currencies, with their forward contracts options (setting a fixed exchange rate in the future).
The customer service is also excellent, and operates over the phone (and email too).
Tide is the best option, get £75 with a business account (deposit £100) and £100 with a saver account (deposit £5,000).
If you’re got a bit of spare cash in your account, you could earn money (interest) from it.
Wise offers a great interest rate, 5.05% (4.49% after fees).
Wise is a very popular money transfer and currency exchange platform, but you can just use it to save your cash.
Instead of a bank giving you interest, Wise has partnered with a large investment firm (BlackRock) so you can earn money on your cash – they use safe government loans that pay interest.
It’s free to open an account, although you’ll pay 0.56% in fees on your saved cash.
The app (and website) is super easy to use too.
Tide is the best option, get £75 with a business account (deposit £100) and £100 with a saver account (deposit £5,000).
Apart from it being against the law to use a personal bank account (for a limited company), and it being against the terms and conditions, there's many advantages to using a business account and are far better than using a personal account (and can be free or very low cost).
Let’s run through the advantages of a business account (there’s quite a few!):
Sounds pretty good right? In summary, business accounts are designed to help you manage your business – saving you time, and help you grow your business too. It’s a no-brainer to use a modern business account with the features that could help your business grow long into the future.
Let’s run through some of those points in more detail.
If you’ve got customers paying you money (or will have in future), you’ll probably need to produce an invoice for them to pay you (and you will have to legally if you charge VAT). A good business account can produce invoices for you – it’s easy to do, and you can even set them up to be automatically created for repeat customers.
If you’ve got customers paying you immediately, without an invoice, for instance, maybe you’re a personal trainer, and clients pay you directly each week – well with some of the best business accounts, such as Tide¹, you can accept payments from anywhere (such as in-person).
Simply create a payment link, and send it to your customer via text message or email. This link opens their banking app with all the payment information pre-filled, such as your bank details and how much to pay. Once the amount is confirmed, the money is sent to your account straightaway via a bank transfer.
Also, you can create a QR code to show your customer, or send it via email or SMS (text message). And if you’ve got a website, you can even add a payment link to a button too.
This method service is usually free or low cost to use (saving you money compared to other payment methods such as card payments, which are typically expensive).
This feature is pretty great. Accounting software will produce reports and all the financial statements you need for your business finances – such as a profit and loss statement (how much your business has made) and a balance sheet (how healthy your business is, such as how much assets, and how much debt).
You’ll need these at the end of each financial year to report to the Government.
Anyway, business accounts can integrate directly with accounting software, and all of your business transactions (e.g. sales and business expenses) will show up automatically. Your reports are then all automatically created based on your transactions. Pretty cool right?
Note: you can’t link a personal account, only business accounts.
With personal accounts, banks don’t really like foreign currencies – they either don’t let you send or receive foreign currencies at all, or charge you hefty fees for the privilege.
This even applies with a lot of business bank accounts from high street banks. Not great if you’re making lots of transactions with international suppliers or customers. However, with modern business accounts, foreign currency transactions are very cheap, and very easy to do.
For this, we recommend Airwallex¹ – you’ll be able to send and receive a huge range of currencies around the world (including Euros and Dollars), almost instantly, and for low cost.
Fingers crossed, hopefully your business is growing a lot, and you’re building up lots of cash in your account, you could earn interest from your money too – just like a savings account for your personal money.
This is pretty rare for businesses to be able to do – personal current accounts typically don’t pay any interest, and neither do most business accounts (including high street banks).
Our recommendation is Wise¹, they offer a decent interest rate, and even the option to invest your money (managed wisely by expert investors).
Nuts About Money tip: you don’t need to just have one business account, you can have as many as you like – so you could just use Wise¹ for your business savings and international transactions, and another for your regular finances.
If you’re thinking business accounts are super expensive, and that’s the reason why you want to use your personal account, well don’t worry – the modern ones can actually be free.
We say free, as they’re won’t be any monthly fees, but you might pay a fee depending on how you use the account, for instance, making transactions. With Tide¹, a great free account, it’s just 20p per transaction.
To recap, yes you do need a business account for your business – even if you’re a freelancer or sole trader!
Having a business account is a legal requirement if you’re running a limited company, as the business is completely separate from the owner(s), so it needs an account for its finances.
If you’re a sole trader, using your personal account for business purposes is against the terms and conditions of pretty much every personal account out there – you could get your personal account suspended or closed for breaching the T&Cs. But don't worry, it's better to use a business account anyway.
Business accounts have great features to help you manage your business finances, save time and even grow your business (like invoicing and managing your tax bill).
They can also be free – so there’s really no need to use your personal account. Lots of the modern business accounts offer a free plan (no monthly fees), and then you simply upgrade if and when you want to (as your business grows and you need more features).
It’s really a no-brainer to use one!
As a reminder scroll up or click best business accounts to see our recommendations again. Also, for international payments scroll up or click the best business account for international payments. If you want to save your business cash check out the best business account for savings.
If you need more help with banking, check out our banking home page.
All that’s left to say is good luck with your business!
We’d love to hear from you, and it will help others too.
Christopher Dowling combines a communications degree with over 10 years experience in the financial services industry in London – with focus on educating people on a wide range of money topics in an easy to understand way. He writes about savings, investing, pensions, mortgages, insurance, banking, loans, business finance and other money topics.
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Tide is the best option, get £75 with a business account (deposit £100) and £100 with a saver account (deposit £5,000).