Whether your business has been established for a while or you’re just starting out, a slick digital account with useful integrated tools and services can make a huge difference. Learn the key benefits to look for, and find out what hundreds of business account holders voted most important in a Finder poll.
If your business is registered with Companies House as a limited company, and you intend to use financial services, then you’re legally required to set up a business account for that purpose. This is because a limited company is a distinct legal entity, and its finances must be kept in an account separate from your personal finances.
It’s more of a grey area if you’re operating as a sole trader, however. You’re not legally obliged to have a separate business account and if you have a side-hustle or you’re a freelancer, then receiving the occasional work payment in your personal account shouldn’t be an issue. However, some banking providers state in their small print that you can’t use their personal accounts for business finances. If yours does this, and it spots a high volume of business-related payments going in and out, it may contact you and ask you to open a business account.
But whether or not it’s a legal requirement for you to open a business account, there are lots of benefits to setting one up, apart from the practicalities of keeping your personal and business money separate.
With an online business account, you can access your account details, view your transaction history or make a payment 24/7 at the touch or a button, either on a desktop computer or a mobile phone.
A Finder survey of 362 business account holders found that online banking and mobile banking were the top 2 features that were important to business account holders both before and after the COVID pandemic. This indicates that having quick and easy access to their business account, at any time, is a priority for business owners.
Another advantage of having a digital-based business account is that you can typically contact customer support through a live chat or an in-app messaging service, helping with any on-the-spot queries you might have.
Having an online business account means you can make use of any other digital finance tools that come with it. For example, some UK business accounts include invoicing services, where you can create, send and track customer invoices and payments.
Other business accounts might offer a direct integration with accounting software packages – such as Xero, FreeAgent or Sage – or the ability to download your account statements and upload them to any existing accounting software that you use. This makes it easier for you or your accountant to get a holistic view of your business finances and draw on the relevant information needed to submit your annual accounts.
Opening a business account online is typically done in hours not days, as long as you have the right documents. Any ID and credit checks can be carried out electronically and any requested business documents can be submitted online, meaning many banks promise an application process that takes a matter of minutes to complete.
For example, you can apply online for a Card One Money business account in around 10 minutes and the company says most accounts are usually open within 3 hours. After your account approval, you’ll be sent your account number and sort code, so you can start making and receiving payments straight away. The card(s) for your business account will then arrive within 5 working days.
There is a one-off application fee with this account of £55, then a monthly fee of £12.50 plus fees for making transactions, such as paying a direct debit or making an ATM cash withdrawal.
Funds in Card One Money accounts are protected by a process called safeguarding, which means client money is held in a separate ring-fenced account, keeping it secure. Card One Money is not covered by the Financial Services Compensation Scheme (FSCS).
For verification purposes, business directors will always need to provide ID to open a business account. With Card One Money, your business and its directors would not be subject to a credit check, which could be beneficial if you have a poor credit history and are unable to open a business account with some other providers.
The associated benefit of opening and operating a business account, and then keeping your finances in good shape by paying bills on time, is that this could help to boost your business credit score for the future.
To find out more about different types of business accounts, and to find the right one for you, explore Finder’s business banking section, which details the fees and features of a range of business accounts.
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