Nutty

Do I need a business bank account?

Christopher Dowling
Editor-in-Chief
Updated
May 19, 2024

In a nutshell

Yep. 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, and using a personal account for business use is against the T&Cs of almost all banks. The best business account is Revolut, 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 likely 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.

Why you need a business account

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.

Sole trader

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.

Sole trader

Limited 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.

Registered company

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. Pretty simple really.).

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.

Limited company

Nuts About Money tip: if you’re a startup, check out our guide to the best business accounts for startups.

Best business account

Revolut is free to open an account, easy to use, and has great features to manage your business finances.

Visit Revolut¹Visit Revolut¹

Do you need a business account as a sole trader?

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.

Business account

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?

Do you need a business account as a limited company?

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. We’ll run through the best small business bank accounts below.

Best business accounts

Whether you’re a sole trader, or a limited company, here’s the best business accounts:

Offer icon

Try a paid plan free (1 month)

Trophy icon
Best overall
Revolut rated 5 stars

Revolut

Revolut is a modern business account designed to suit modern day businesses – unlike traditional banks that run on slow and outdated systems and processes.

Revolut have thought of everything, and the app is packed out with many helpful tools and features to help grow your business. And easy to use.

It’s pretty much perfect for every size of business, from a freelancer to large enterprises.

Learn more

Dropdown arrow icon

It’s also great for international businesses, and receiving payments in different currencies, such as customers based in Europe, paying in Euros. You can hold over 25 different currencies inside your Revolut business account – you can swap one currency for another in a couple of clicks, for a low exchange rate too!

You can also receive payments from customers in-person without needing a card machine, and online without needing other software, and even via text messages.

And, there’s loads of extra features you wouldn’t expect from other accounts, such as payroll and invoicing features, and team expense management.

It’s got pretty much everything you need, and more. Highly recommended.

Note: it’s not technically a bank, it’s an e-money account. Your money is still just as safe and secure.

Overall cost: low
Account cost:
free to £100 per month
Bank transfer cost:
free up to a limit
ATM withdrawal cost: free up to a limit
Multiple currencies:
25+
Debit card:
yes
Cash deposits:
no
Accounting integrations:
yes
Save or invest cash:
yes (and crypto)

Offer icon

Get £50 when you open an account

Trophy icon
Pay as you go
Tide Bank rated 5 stars

Tide Bank

Tide is a popular bank account in the UK, with over 500,000 customers. 

It’s a bit more basic than the other business bank accounts, but you can start with a free account and pay fees as you use it (e.g. payment per transaction).

The app itself is easy to use and has useful tools to create invoices and manage expenses.

Learn more

Dropdown arrow icon

However, you can’t use multiple currencies.

Tide will also help set up your new business and register your limited company if you sign up with them, and need help with the admin side. They can also help you get a business loan.

Overall cost: low
Account cost:
free to £49.99 (plus VAT) per month
Bank transfer cost:
20p per transfer (free on paid plans)
ATM withdrawal cost:
£1
Multiple currencies:
no
Debit card:
yes
Cash deposits:
yes (£2.50 or up to 3%)
Accounting integrations:
yes
Save or invest cash:
no

Offer icon
Trophy icon
Pay as you go
Anna Money rated 4 stars

Anna Money

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.

Learn more

Dropdown arrow icon

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

Best business account

Revolut is free to open an account, easy to use, and has great features to manage your business finances.

Visit Revolut¹Visit Revolut¹

Best business account for international payments

Offer icon
Trophy icon
Multiple currencies
Wise rated 5 stars

Wise

Wise business is the best option for multiple currencies. Send and receive money in over 40 different currencies, including Euros and US Dollars, all for a low cost (it’s the cheapest option).

You can even store multiple currencies in one account, meaning you don't have to keep swapping currencies and paying exchange fees.

Another great feature, is being able to save and invest your business money, so instead of your money sitting in your account doing nothing, you can invest it to grow more over time (with the help of experts) – adding a whole new revenue stream to your business – and still allowing you to spend it whenever you need to.

Learn more

Dropdown arrow icon

Overall cost: low
Account cost:
£45 set up fee
Bank transfer cost:
From 0.43% to send. Free to receive
ATM withdrawal cost:
free up to a limit (£200)
Multiple currencies:
40+
Debit card:
yes
Cash deposits:
no
Accounting integrations:
yes
Save or invest cash:
yes

Best business account

Revolut is free to open an account, easy to use, and has great features to manage your business finances.

Visit Revolut¹Visit Revolut¹

Best business account for savings

If you’re got a bit of spare cash in your account, you could earn money (interest) from it.

Offer icon
Trophy icon
Easy to use
Wise rated 5 stars

Wise

Wise offers a great interest rate, currently 4.82%.

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 0.29% in fees on your saved cash.

The app (and website) is super easy to use too.

Learn more

Dropdown arrow icon

Best business account

Revolut is free to open an account, easy to use, and has great features to manage your business finances.

Visit Revolut¹Visit Revolut¹

Advantages of business account

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).

Do I need a business bank account?

Let’s run through the advantages of a business account (there’s quite a few!):

  • Able to separate business and personal finances
  • Loads of features to help your business (e.g. invoicing)
  • Accept payments directly from customers from anywhere (and online)
  • Can help with how much tax you need to pay
  • Can use them to get a business loan
  • Can integrate with accounting software
  • Send and receive international payments (foreign currencies)
  • Earn interest on business money
  • They can be free
  • Your bank will like you (they won’t when using a personal account)

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.

Key features of business accounts

Tools to help your business

Invoicing

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.

Receive payment directly

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 Revolut¹, you can accept payments from anywhere (such as in-person). 

Receive payment directly

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, even add the 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).

Integrating with accounting software

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?

Integrating with accounting software

Note: you can’t link a personal account, only business accounts.

Send and receive foreign currencies

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.

Currency conversion fee

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 the more modern business accounts, foreign currency transactions are very cheap, and very easy to do.

For this, we recommend Wise¹ – 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.

Send and receive foreign currencies

Earn interest on your money

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).

Again, our recommendation is Wise¹, they offer a decent interest rate, and even the option to invest your money (managed wisely by expert investors).

Earn interest

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.

Business accounts can be free

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 small fee depending on how you use the account, for instance, making transactions. With Tide¹, a great free account, it’s just 20p per transaction.

Free business account

Revolut¹ is great too, and has no monthly fees (unless you want to upgrade for more features and better rates).

Let’s recap

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!

Our top recommendation is Revolut¹, it’s got a free plan, and there’s a huge range of features to help your business grow and manage its finances.

And for international payments and earning money from business savings, check out Wise¹.

All that’s left to say is good luck with your business!

Fact checked icon
This article has been fact checked.

This article was written, reviewed and fact checked by the expert team at Nuts About Money. You’re in safe hands. Learn more.

Best business account

Revolut is free to open an account, easy to use, and has great features to manage your business finances.

Visit Revolut¹Visit Revolut¹

Get news, tips and deals straight to your inbox

Sign up

Related articles