What do you need to open a business bank account in the UK?

Business banking can be synonymous with admin, paperwork and red tape. That’s a bit outdated, especially when it comes to the newer challenger banks, and even the more traditional banks have made their processes simpler and easier than they used to be.

The process is not completely free of paperwork, though, especially when it comes to getting your account open and operational.

There are some things you will always need to open a business bank account and we’ve explained them in this article, as well as sharing some behind the scenes information that you should find useful.

 

Who needs a business bank account? 

Businesses come in a few different forms in the UK and each type has its own requirements and responsibilities when it comes to banking.

The three main types of business are sole traders, limited companies and partnerships. There are also community benefit societies, charities and a few others, but we’re talking about the most common types for small and medium enterprises (SMEs) in this article.

Sole traders 

For sole traders, there’s nothing to stop you from using your personal current account for all your business finances. That is, unless you’d prefer to keep things separate. It certainly makes things easier when it comes to accounting and sorting out your expenses.

Plenty of sole traders choose to use a business bank account for peace of mind and ease of admin.

Limited companies 

Limited companies are legally obliged to have a business bank account, separate from its directors and shareholders’ personal funds.

If you own a limited company, you need a business bank account – no ifs or buts.

Partnerships 

There are three forms of partnership in the UK: general, limited and limited liability partnerships (LLPs).

If you are part of a limited partnership or LLP, the law says you must have a business bank account. General partnerships are in the same position as sole traders: not essential, but can be sensible.

So, to recap, you must open a business bank account if you own a limited company, a limited partnership or a LLP. Sole traders and general partnerships don’t have to, but many choose to so they can keep their personal and business finances separate.

 

What are the eligibility criteria for opening a UK business bank account? 

Each bank sets its own eligibility criteria for business accounts, so there isn’t a universal standard that we can share.

There are common themes across a lot of banks, though, which we’ve listed below: 

• Your business must be at least one year old

• The applicant must be over 18 years old

• The applicant must be a director of the company

• All directors must be UK residents

• You successfully pass Know Your Customer (KYC) and Anti Money Laundering (AML) checks

• Your company isn’t dissolved, in liquidation, or struck off

Don’t take this list as gospel – you should do your own research into banks and their requirements for new customers. There’s an account for almost everyone if you look hard enough.

 

What do you need to open a business bank account? 

As with eligibility criteria, every bank is a little bit different. The legal processes they have to follow, however, are always the same.

These are the KYC and AML checks mentioned above, which require the same documents every time.

Proof of ID documents 

The bank needs to know that the person applying for the account is who they say they are. Otherwise, anybody could open an account in your name.

You’ll be asked to provide a scan of one of your forms of identification (eg. passport or driving licence). If you’re applying in-person, you’ll need to bring your original documents with you so the bank can make a copy.

If you’re applying online, you might be asked to do a biometric face scan (to compare your face with the one in your ID) – either using a website connected to the bank or by taking a photo of yourself with your ID.

Proof of UK address 

To make sure you and your business are UK-based, the bank will ask you to share a proof of address.

This could be a utility bill, mortgage statement or council tax bill. Generally, these documents need to be dated within the last three months.

Business verification documents 

For a bank to open an account for your business, it needs to be real and still operating. 

You’ll need to show your certificate of incorporation (limited companies and partnerships), partnership agreement (partnerships) or your self-employed registration or tax return (sole trader).

You might also be asked to show: 

• Proof of funds, if your new account has a minimum balance requirement

• Proof of business licence, if you’re in a licenced or regulated industry

 

Who can open a business bank account? 

Banks are strict about who can open current accounts – and that’s especially true for business accounts.

• For limited companies and partnerships, only a director can open the account

• For general partnerships, one of the two partners can open the account

• For a sole trader, only that person can open the account

Appointed representatives (eg. your accountant) and employees (eg. a finance manager) cannot open a bank account for your business.

Being able to prove you are the person you say you are is one of the main reasons the bank asks to see ID to open your account.

 

Opening a business bank account in three steps 

There shouldn’t be any nasty surprises with opening your business account, but you might not be clear about the full process.

An abridged version looks like: 

1. The first steps: research business banks and find the best account for you, then start gathering the documents we’ve listed above. 

2. The application: start and complete your application. Some banks will walk you through the process on a phone call, others will leave you to your own devices and others might organise it in-branch. 

3. Pass the checks: once you get through KYC and AML checks, you’ll pretty much be done. Something might get flagged up in these checks but usually it’s an issue that can be cleared up with another document or a quick explanation. 

And a much more detailed version can be found in our start-to-finish explanation of how to open a business bank account.

 

The key benefits of using Allica for your business banking 

If you’re reading this article, it’s quite likely that you’re in the market for a business bank account.

We’d like to throw our famous orange hat into the ring with a quick look at why so many SMEs choose Allica Bank.

Banking built on relationships 

Every Allica business current account customer has a relationship manager – a dedicated person within the bank, based in the same region, who gets to know their business and helps them with tailored support as it’s needed.

It used to be a given that you could dial your bank and speak to someone you knew and trusted. Today, it's hold music and not much else. We like to call our approach ‘how business banking used to be, just better.’

Fee-free (almost) 

Our business current account comes with no monthly charges and almost no fees for payments or transactions. The only payment we charge for is CHAPS – at £20 per transfer.

Fees quickly add up if you’re paying them for basic features like BACS payments. We want you to keep more of your money, so we don’t charge for them.

Cashback on all card payments 

You’ll get 1% back on every card transaction up to £10,000 and 1.5% for anything over that amount in a month. A penny on every pound might not sound like much, but it’s £100 every month if you’re spending £10,000 buying things for your business.

Great savings 

Every current account customer has access to an instant access Savings Pot, which comes with a 4.08%* (variable) AER interest rate.

The average SME savings balance is £75,000, which could earn over £3,000 a year at the current rate. More money in your pocket (or bank account) isn’t something to sniff at.

View our Savings Pot Key Product information, terms and conditions and eligibility criteria for more information.

Learn more about Allica Bank’s current account

 

FAQs

We receive a lot of questions about bank accounts, which isn’t much of a surprise. It does mean we know the most commonly asked questions, which we’ve answered below to save you sending an email or making a call.

Is it hard to open a business account? 

It should be easy to open a business current account, but you’ll need to meet the bank’s eligibility criteria for new customers. Those criteria differ between banks, but they don’t tend to be too strict.

Some people can’t open business accounts, including: under-18s, non-UK residents, anyone convicted of fraud or other financial crimes.

How long does it take to open a business bank account? 

Some banks will open a new account within one or two weeks. Others have long delays, leftover from the pandemic and the demands they faced to organise huge amounts of lending in a short timeframe.

It’s hard to say exactly how long it takes to open an account, but challenger banks with more modern infrastructure are likely to provide a quicker turnaround time.

Can a sole trader open a business bank account in the UK? 

Yes, sole traders can open a business account. Some banks offer generic business accounts to all customers, while others might have a specific sole trader account alongside accounts for limited companies.

It’s not a legal requirement (like it is for limited companies), but many sole traders choose to open a business bank account anyway. A separate account for your business makes bookkeeping and other admin a lot easier. 

Can I apply for a business bank account online? 

Almost every bank in the UK will let you apply for an account online. Some will ask you to do some of it over the phone, others might want to see you in a branch.

At Allica Bank, we have an initial application form that you can complete online, before completing an assisted application over the phone. We’ve found that this is the quickest way to open new accounts and causes the fewest holdups for new customers.

 

A simple process with a few twists 

Opening a business bank account should be quick and easy. The reality can vary a bit, depending on the bank you choose, how busy they are and what their requirements are.

There are a few essentials that every bank will ask for – ID, proof of address, proof of business incorporation – but you shouldn’t need stacks of paperwork to get your account up and running. Those documents are needed for you to pass some important anti-fraud and identity checks. These tend to be pretty quick as long as you and your business are legitimate.

If you’re still researching business bank accounts, you can read all about our current account here for some inspiration. And if you like the look of our Business Rewards Account, you can start your application today!

Links were live and information was correct at the time of writing the article.

* 'AER' stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Businesses keeping less than £50,000 in the account may earn a reduced rate of interest and may incur fees.