What are the Benefits of a Business Bank Account?

Table of Contents

Benefits of business accounts
Are there disadvantages of a business bank account?
Is it better to have a business or personal account?
Is a business bank account worth it?
Who can open a business bank account?
Find a business bank account that can benefit you

A business bank account keeps your business and personal finances separate, and can take the stress out of tasks such as tax returns.
You could benefit from useful features like accounting software, and invoicing and payment tools.
It will make your business look more professional and help build your business credit score.

Is it worth having a business bank account? While limited companies need to have a dedicated business account by law, sole traders could potentially use a personal bank account instead. This may seem to be the easy option, yet there are many compelling ways a business bank account can benefit sole traders, freelancers and businesses of all sizes.

Benefits of business accounts

Keeps your business finances separate

Having a separate bank account for your business just makes everything easier all round. This is because all of your business transactions are in one place, and not muddled up with your personal finances.

Gives better oversight

You’ll find it quicker and easier to monitor how your business is doing, manage your cash flow and keep track of the money coming in and out of your business. If you have payments outstanding, it should be simple to identify who owes what.

Saves time

Having separate business records should save time when it comes to accounting, bookkeeping and filing taxes. And should HM Revenue & Customs (HMRC) request access to your business finances for any reason, it can simply look at your business account rather than trawling through your personal transactions.

Useful tools and features

Most business bank accounts come with tools and features that are specially designed to help make your life easier as a business owner. These might include:

automated invoicing
option to upload receipts
categorisation of spending
integration with accounting software
payroll functions
international payment capabilities
account upgrades, for when your business grows, for example

Bear in mind that some business accounts might include certain features for free, while others may involve additional charges.

Looks professional

Having your business name on invoices and next to payments just looks more professional. It can help build credibility and trust among clients and suppliers, who may be reluctant to send payments to a personal account.

Tailored towards businesses

Business bank accounts are specifically designed for businesses and offer features to suit. A personal bank account is unlikely to offer invoicing and payroll tools, for example, or direct revenue and expense tracking.

Access to specialist support

Many business account providers offer dedicated customer support tailored towards business owners and their specific needs. Certain accounts might also provide access to your own business relationship manager, or offer the opportunity to connect with other businesses and experts.

Business credit rating

Having a business bank account could help your business build its own credit score. ]This could be important for securing credit in your business’s name in the future, and gives lenders another way to assess creditworthiness besides your own personal credit score.

Access to credit

You may find it much easier to access business loans, business credit cards and other credit facilities from certain providers if you hold a business account with them. Many of the checks they need may already be complete or can be made through quick access to your account.

Perks and special offers

While promotional offers and other perks should not be the sole reason for opening a business account, any additional benefits that might be on offer should be considered as part of the account package as a whole. Cashback, free accounting software and payment tools, and general discounts are just some of the bonuses an account may provide, and could be worth bearing in mind in relation to your business.

Prepared for growth

Even if you think your business doesn’t need a business bank account right now, it’s worth being ready for when your venture properly takes off.

Many providers offer more basic business accounts aimed at startups and smaller businesses, sometimes with no monthly fees, but also have a range of paid-for accounts with added features that you can upgrade to as your business grows.

It may be legally required

If your business is set up as a limited company or a limited liability partnership, there are no ifs or buts – you must have a separate business account by law.

Are there disadvantages of a business bank account?

While there are many potential benefits of business accounts, there are some considerations to be aware of, too, including :

Monthly fees: Some business bank accounts charge monthly fees which are payable regardless of how often you use the account. Plenty of free business bank accounts with no regular monthly costs are available, and will be worth considering if they offer the features you need.
Transaction fees: Similarly, there may be fees that an account charges for different types and volumes of transactions. Always check terms and conditions, and look for limits and fee-free periods. If you regularly transact abroad, charges on international payments will be important to you.
Short-term admin: To open a new business account, you will need to gather the right information and complete an application. If time is in short supply, there are instant business accounts, some of which can be applied for in minutes and open the same day.
Minimum requirements: Some accounts may have minimum or maximum turnover requirements, or might only be available to businesses that have been trading for a certain length of time. For newer businesses, specific startup business accounts are a good place to look.

Is it better to have a business or personal account?

Most business owners are likely to find it is better to have a separate business account rather than using a personal account, even if it’s not legally necessary. While sole traders are able to use personal accounts to manage their business finances, having a dedicated business account offers many benefits in relation to tracking business performance and payments, bookkeeping and filing taxes, and tailored tools and features that can all help save time and effort.

If you’re a sole trader who is considering using your personal current account, note also that some providers may not allow their accounts to be used for business purposes. With a business account, you know that it can for sure.

» MORE: Do you need a business bank account?

Is a business bank account worth it?

Yes, it can be worth opening a business bank account, regardless of whether you’re a limited company that has to by law or a sole trader. Despite the potential costs and additional admin, the wider advantages of having a business account usually make running a business easier and save you valuable time.

Tim Leonard, Lead Writer at NerdWallet

What our Nerds say…

“If you’re not sure whether a business account is worth it for your business, consider dipping your toes in with a simple account with no fees. This way, you can sample the benefits of a business bank account without your wallet taking a hit and upgrade to a paid account later if you want to access more features.“

Who can open a business bank account?

Generally, business bank accounts can be opened by sole traders, directors of limited companies and partners representing limited liability partnerships or general partnerships. Charities and their representatives can also open business bank accounts, though this might be a specific community or not-for-profit account.

Usually, you will need to be aged 18 or over and a resident of the UK, though some accounts for non-uk residents are available.

Beyond this, different providers can have different requirements, particularly in terms of turnover and trading history.

» MORE: How to open a business bank account,

Find a business bank account that can benefit you

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