If you’re in the early stages of setting up your own business, you might want to open a business bank account before you start trading.
In some cases, this is possible, but it depends on the type of business structure you choose. Will you be self-employed (as a sole trader) or run your own limited company?
Sole traders: you’ll usually need to register with HMRC first
If you’re setting up as a sole trader, many banks will let you apply for a business account, but most will expect you to have already registered with HMRC as self-employed before activating it.
You’ll usually need to provide:
- Proof of ID (such as a passport or driving licence)
- Proof of address
- A short description of your business activity
Some banks may also ask for early evidence that you’ve started trading, such as an invoice, business website, or contract with a client.
This isn’t a legal requirement, but it is part of their standard Know Your Customer (KYC) checks to confirm that you’re setting up a genuine business.
Once you register with HMRC, you’ll receive a UTR (Unique Taxpayer Reference) in the post. Your bank may request this during the account setup process.
Digital providers such as our partners Tide or Zempler are designed with new businesses in mind, but even they require HMRC registration before opening a sole trader account.
Limited companies: you must incorporate first
If you’re setting up a limited company, things are a bit stricter. You won’t be able to open a business account until your company has been incorporated with Companies House.
This is because a company is a separate legal entity from its owners; it must maintain a separate bank account.
The bank will usually want to see:
- Your company registration number (CRN)
- Details of directors and shareholders
- A registered business address
This information must match what’s on the Companies House register, so you need to complete the setup first. You do not need to have started trading, but the company must be fully incorporated.
Some providers allow you to open an account on the same day as incorporation by linking the two steps. Others may take a few days to verify your company before the account is active.
Why open a business account early?
Even before your first client payment, there are good reasons to get a separate account in place:
- It helps you separate personal and business finances from day one
- It looks more professional when sending invoices
- It makes it easier to connect to accounting software or card readers
- It gives you somewhere to receive Stripe, PayPal, or bank transfers immediately
Can you run your business from a personal account?
If you’re a sole trader, the answer is yes – legally, you can use your personal account.
But most business advisors, including HMRC, suggest keeping things separate. It’s much easier for tax and bookkeeping, and reduces the risk of mixing business and personal transactions.
You can find out more here: Do you need a separate bank account if you’re self-employed?
If you’re running a limited company, however, the answer is no. Your business is a separate legal entity. The account must be in the name of the company, and company funds must be kept separate from your personal money.
Some final tips from the ByteStart team
- If you’re self-employed and just getting started, you can usually apply for a business account, but most banks will expect you to have already registered with HMRC before activating it.
- You may also be asked to show some early signs of trading activity, though this is purely for internal risk checks – not a legal requirement.
- Don’t put off registration for too long. HMRC expects you to register as soon as you start trading or earn more than £1,000 in a tax year. You can read more in our guide: Do I need to register as self-employed?
- If you’re setting up a limited company, be aware that you’ll need to complete incorporation first. Then, you can open a business account in the company’s name and begin trading properly.
Next: How to choose the best bank account if you’re a sole trader