Opening a business bank account is one of the practical jobs involved in running a limited company. Even if you’re the only director and shareholder, the company’s money is not your personal money. Choosing an account that suits the way you trade will make day-to-day payments, bookkeeping and tax administration easier.
Does a limited company need its own bank account?
Yes. A limited company is a separate legal entity and its finances must be kept separate from those of its directors and shareholders. Government guidance says the company’s banking should be separate from personal banking. In practice, you should open a business account in the registered company’s name rather than receiving company income into your personal account.
The distinction matters when you pay yourself, reimburse expenses or transfer money between yourself and the company. These transactions need to be recorded correctly: a payment from the company to you is not automatically a dividend or salary.
If you’re deciding how to trade, see our sole trader versus limited company guide. If you’re trading personally instead, read our guide to choosing a sole trader bank account.
What to compare before choosing an account
Think first about how the company receives and spends money. A consultancy paid by bank transfer has different requirements from a retail business that deposits cash each week.
- Monthly and transaction charges. Compare account fees, payment allowances, cash deposits, international transfers and any charges for additional users.
- Accounting integration. A reliable feed into Xero, FreeAgent or QuickBooks can reduce manual bookkeeping, but check whether the integration works with your chosen plan.
- Multiple users. If a co-director or bookkeeper needs access, look for separate logins, approval controls and appropriate permissions.
- Payments and cash handling. Consider Faster Payments, Direct Debits, card acceptance, international payments and whether you need branch or Post Office deposit services.
- Support and protection. Check who provides the account, whether it is a bank or an electronic money provider, and what protections apply to your company’s funds.
- Growth. You might later need an overdraft, business savings, payroll payments or international transfers, even if you do not need them now.
Our guide to reducing business banking charges explains what to look for in the tariff.
What documents do company directors need?
Providers set their own requirements. They will usually ask for the company’s registered name and number, trading address, business activity and expected turnover. They will also verify directors and may ask for details of people with significant control or other beneficial owners.
Have your Companies House details and identification ready. Some providers can check much of the company information electronically, while others may request further documents or ask questions about ownership or the source of funds.
You generally need to incorporate the company before the account can be opened in its name. See can you open a business bank account before you start trading? for more detail.
High-street banks or app-based business accounts?
Neither is automatically better. Online-first providers may offer straightforward applications and convenient integrations, but some have restrictions on cash deposits, borrowing or complex company ownership. Established banks may offer a wider range of lending and branch services, although their tariffs and application processes can differ.
Make sure you’re comparing the account itself, not just the app. Not every provider describing its service as business banking holds customer deposits as a UK bank. If protecting larger balances matters to you, read how FSCS protection applies to business accounts.
Banking and limited company bookkeeping
Ideally, the account should feed directly into your company’s bookkeeping system. Keep the company’s receipts and payments separate from directors’ personal expenditure, and reconcile the bank balance regularly.
Companies often keep money aside for Corporation Tax, VAT or upcoming bills. You can use more than one account for this, provided each is held and recorded as a company account. Our guide explains how multiple business accounts can work.
For practical help with bank feeds, see connecting business banking to accounting software.
Reviews, switching and other useful guides
If you’re considering a specific provider, compare its current eligibility rules and full fee schedule. ByteStart has separate guides to Tide, Zempler and ANNA Money. Fees and promotional offers can change, so check the provider’s current terms before applying.
If you already have an account, you may be able to move it using the Current Account Switch Service, depending on the company’s size and whether both banks participate. See our business bank account switching guide.
You can also read the government’s business bank account guidance and company record-keeping requirements.