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Introduction

The United Kingdom banking sector is the 4th biggest in the world encompassing ~300 banks, and ~9,000 bank branches offering financial and related services to the citizens of the United Kingdom. A business bank account aids the owners of a business to keep personal finances separate from business transactions, and these accounts typically come with distinctive terms and conditions for a business in the United Kingdom. A business bank account enables a business owner to keep track of their cash flow, manage expenses, and make it simpler to compute tax obligations. These bank accounts are distinct from personal or private bank accounts as they are designed precisely for business operations. When a business owner decides to opt for a business bank account, it is suggested to compare the available options in the market and select the one that offers decent interest rate and low charges. For example, if the business model requires making payments by electronic means, the ideal business bank account should be the one that offers free or low-cost electronic transactions. Also, if the business involves mainly checks, the business owner can look for a business bank account that offers decreased charges for transactions made via paper. Many banks in the United Kingdom offer great deals for start-ups and small-businesses.

Factors to consider while opting for a Business Bank Account

What an individual needs to do, in the United Kingdom, in order to structure a business depends upon the type of business being set-up. Most businesses in the United Kingdom are listed as partnerships, limited company or sole trader. Once an individual has registered the business, he/she will be required to open a business bank account. In contract to a personal bank account, that is typically free of charges, the business bank accounts include transaction charges, along with other charges. Charges ranging up to £25 for each transaction are possible along with additional once-a-month account fees. However, a business owner can follow the below mentioned steps to minimise the bank account charges.

Opt for a personal bank account

If an individual operates as a sole trader (instead of operating as a limited company), then he/she might opt to use their usual bank account for business transactions. However, if an individual opts to operate a separate, out-and-out business bank account, managing the business record-keeping transactions can be a lot simpler. Additionally, a separate business bank account can be of great assistance in case HM Revenue and Customs (HMRC) chooses an individual’s tax return for an exhaustive investigation. If an individual makes huge number of transactions involving big deal amounts, then the bank may recommend to set-up a separate business account.

Selecting a business bank account with low charges

While opening a business bank account, a business must select a bank account that offers low charges. For example, to setup a Business Bank Account with Santander the bank offers limitless free everyday transactions for a period of one year or 18 months if the user is a prior Santander customer. Additionally, the bank gives 0.25% in-credit interest. Once the free period ends, an individual can opt for four dissimilar fees ranging from £7.50 per month and £40 per month contingent on regular cash deposit withdrawal limits. Let’s take two more examples – NatWest's package for start-ups includes 18 months of free limitless bank transaction banking. Post the end of the free period, the services are returned to the normal tariff, where the business is required to pay per transaction. An individual can opt for a business bank account if he/she began trading during the past 12 months, and the turnover of the business is less than £1mn. Also, TSB provides 18 months free banking for start-ups in the United Kingdom. The free banking package encompasses depositing and withdrawing cash, issuing cheques and paying in cheques, along with direct debits & paying standing orders. Banking services such as Clearing House Automated Payment System (CHAPS) are also charged.

Minimising or reducing the charges payable to banks

Before opting for a business bank account, a business owner must work out the services required in order to minimise charges. Also, he/she can opt for smarter banking transactions, for example, make certain that the business uses Bankers' Automated Clearing Services (BACS) instead of opting for cheque, select automated transactions wherever feasible, opting for online banking, reducing the cash paid into the account, and avoid using unsanctioned overdrafts. It is imperative to cross-check the charges of the transaction, for example, if an individual agrees to take a cheque which has been give back unpaid by the debtor's bank, the bank is liable to charge the individual with administration cost, and he/she will not receive the amount due. In such a scenario the individual can pursuit the payment-up, and ask the debtor to pay the charges incurred.

Top Business Bank Accounts in the United Kingdom in 2018 for start-ups

Cashplus

Cashplus

Cashplus verifies the company name and address, and grants approval with seconds. The process is very simple and it takes as less as 4 minutes to file in the application and few seconds to process it. Key features include:

  • Account number and sort code instantaneously available
  • Quick online application
  • No credit check in order to open an account
  • Prompt online decision
  • Ready to receive payments
  • Enable the business owner to focus on professional activities
  • No monthly fees – just £69 once a year

Cashplus business current account comes along with a MasterCard Business Card and this is a great substitute to a business bank account. This service is available to any size or type of organisation or business – Private or public companies; partnerships, limited companies, sole traders; charities, government organisations, multinationals. Once an individual’s application is accepted and the individual pays the reduced annual fee, the MasterCard Business Card is dispatched to reach the account holder with 3-5 working days. Post the card is received, an individual can

  • Pay in cash or sent money via bank transfer
  • Pay expenses, suppliers and bills online
  • Use card in-store or online or to take out cash

The Cashplus business current account is a great substitute to a business bank account as no United Kingdom buying transaction fees is applicable, no monthly account management fees, and the user is free to receive bank transfers. Additionally, it takes away the complication of High Street business banking, so that business owners can lay emphasis on expanding their business. Salient features include

  • Payment can be made in cash at any United Kingdom Post Office
  • The account will be in the name of the business
  • Set up standing orders and direct debits for free
  • Register it with HMRC and merchant services

The business account can furthermore be used to maintain control of reconcile expenditures and employee spend. Benefits include:

  • Download statements for each card in comma-separated values (CSV) format online
  • Integrated with most accounting software
  • Manage cards and settlements online through a CMS (centralised management system)
  • Low annual fee
  • Order up to 99 supplementary cards
  • Block certain cards and transactions, and track expenses online
  • Mobile App: Users can check and manage the business account through the mobile app and each feature of Cashplus Business Account can be gained access to 24/7, from any location and at any time.

The Hongkong and Shanghai Banking Corporation (HSBC)

The Hongkong and Shanghai Banking Corporation

HSBC offers a range of accounts with simple charges, hence, a business can opt for a business bank account that best caters to the business needs. Using the HSBC’s ‘account wizard’, users can provide details such as annual turnover, business type etc. and the bank will provide details about the most suited bank account that best meets the customer’s needs. Once the user decides the details, it is simple to apply online via the account opening form.

  • For most organisations or businesses, the process is completed online, hence the user is not required to visit the branch. However, the bank may need to call the applicant before reviewing the application – time taken to provide the details to the bank is around 20 - 60 minutes.
  • The bank will evaluation the application, and inform the applicant about the status of the service.

Advantages of banking online with HSBC

The major advantage of using HSBC business banking service is that it is ideal for businesses that want to perform banking operations without visiting the bank branch. Its 18 months free Business Banking means

  • No account fees
  • Free cash withdrawals
  • Free to make payments by business debit card, cheque, direct debit, bill payment services or standing orders
  • Free to receive payments
  • Additionally, when an individual applies for a business credit card he/she receives the initial 12 months fee free (post the initial 12 month period, the annual charge for each commercial Card is £32)

Its business internet banking service offers

  • Free online business banking and the service is available 24/7
  • Customers are able to make payments (within the country and world-wide) and instantaneous transfers between accounts up to £100,000 each day
  • Cheaper payments than telephone banking or branch banking
  • Set up and control multiple users
  • Mobile access via iPhone

Lloyd

Lloyd

Whether an individual is starting a new business or is trading previously, Lloyd has a simple business current account to support the business goal with out-and-out business support. The bank’s offerings encompass

Business account

Current account for new businesses includes the following services

  • 18 months’ free day-to-day business banking
  • Free electronic payments and simple pricing
  • Dedicated support from its United Kingdom-based business teams
  • Digital and financial tools for the business

Switching to Lloyds Bank helps focus on growing the business

  • An assured switch within 7 business days, starting from when the business account is opened using the Current Account Switch Service (CASS)
  • 6 months’ free everyday business banking
  • Free electronic payments and simple pricing
  • Dedicated support from its United Kingdom-based business teams

Charities, societies, and clubs

Treasurers' Account

  • Have a second co-signer on the account
  • Easily set-up direct debits and standing orders through internet banking
  • Free everyday business banking for organisations with revenue not more than £50,000 per annum
  • Get free presentation cheques to use when making a large payment or presenting a major prize
  • Get ongoing backing and supervision
  • Manage account via phone or online
  • Quick and easy account opening, with no minimum amount required
  • Regularly monitor funds with free monthly statements
  • Withdraw funds as and when needed, without the need to give notice

Credit Union Account

  • Access paying-in books and cheque – accessible with one or more guarantors
  • Receive free everyday business banking on the Credit Union Account with an annual revenue up to £1m
  • Take benefit of cash credits the same day and have instantaneous right to use all cleared funds
  • Take delivery of monthly statements on all accounts

School Bank Account

  • A range of deposit accounts accessible for surplus funds
  • An optional deferred checking service, helping to avoid delays at branch counters
  • Free business banking
  • Monthly interest paid on current accounts
  • Internet banking with provision for multi-person approval
  • No charges for returning cheques evoked by the payer’s bank
  • Optional cash collection by security companies

Barclays

Barclays

For start-ups in the United Kingdom, the bank offers two price plans to select from, proposed for the way businesses receives and makes payment

  • Mixed payments plan is appropriate for businesses that use cheques, cash, or a variation of ways to receive and make payments
  • E-Payments Plan is apposite for businesses that collect payment through electronic mode and make dealings primarily via debit cards and online banking
Services Mixed Payments Plan e-Payments Plan
Electronic payments (in or out) £0.35 per transaction Free
Cash payments (in or out) £0.90 per £100 £1.50 per £100
Cheques and assisted payments (in or out) £0.65 per transaction £1.50 per transaction
Cash machine cash out and electronic internal transfer Free Free
Monthly account fee £6.00 £6.50

In order to switch a business bank account or open a new business account with Barclays, an individual will be required to meet the following conditions

  • An individual must be minimum 18 years old
  • Have the permission to reside in the United Kingdom perpetually
  • Provide a minimum of 12 months’ United Kingdom address history

This account is appropriate for businesses with income up to £6.5mn. The Bank has unambiguous standards for businesses that operate in specific sectors, such as social housing, agriculture, and certain others. Clients can contact the bank on 0800-515-4624 to make clear any doubts with regards to the account.

To begin banking with Barclays, applicant must provide the following details: Personal details include the following

  • Details about other financial arrangements, such as loans, store cards, and mortgages
  • TIN (Tax identification number), such as National Insurance (NI) number
  • Residential addresses for the previous 3 years

Business details include the following:

  • Trading address and registered company address (for limited companies)
  • Date of incorporation or business start date, business tax identification number, business registration number (for limited companies)
  • Investment capital and turnover details

Yorkshire Bank

Yorkshire Bank

The Bank delivers business banking services for small-to-medium United Kingdom organisations. The company has two services – Yorkshire bank - start-up business banking, and Yorkshire bank - switcher’s business account.

Yorkshire bank – start-up business banking

  • Maximum Interest (AER): 0%
  • Free banking duration: 25 months
  • Account fee: £5 per month there completion of 25 months
  • Overdraft facility: Available
  • Direct contact with somebody from the bank who recognises the type of business
  • Flexible solutions such as a variety of financial management solutions to opt from
  • Specialist support, tools and supervision offered
  • Offer appropriate for start-ups opening initial account within 12 months of beginning trading. No charges pertinent for direct debits, cheque or cash deposits and withdrawals, or other automated transactions

  • Yorkshire Bank – Switcher’s Business Account

    • Offer is appropriate for small-business banking customers with revenue not more than £2mn, swapping their chief business current account. No charges pertinent for direct debits, cheque or cash withdrawal and deposits, or other automated transactions for 25 months
    • Maximum Interest (AER): 0%
    • Free banking duration: 25 months
    • Account fee: £5 per month there completion of 25 months
    • Overdraft facility: Available
    • Direct contact with someone from the bank who understands the type of business
    • Flexible solutions such as a variety of financial management solutions to opt from
    • Specialist support, tools and supervision offered

    Santander

    Santander

    The Bank provides two kinds of services with the start-up business current account – 18 months unrestricted business banking services or 12 months of unrestricted business banking services. For small-and-medium sized business, with 2 directors, partners or owners, in its initial year of trading, the applicant is eligible for 12 months free business banking.
    All businesses including sole traders, partnerships, limited liability partnerships, private limited companies, and trusts can apply for a business bank account. Customers can receive 6 months extra free business banking (total 18 months) if prior to opening the business bank account, the business is a Santander Private customer, 123 World, or Santander Select. Post the free business banking period, the business will be moved to a £7.50 each month tariff where it will receive.


    • Interest – receive 0.10% gross/ Annual Equivalent Rate (AER) (variable) on any credit balances
    • Flexible ways to handle the money through Santander cash machines, online and mobile banking, and participating post office branches countrywide
    • A Visa debit card and chequebook

    To be eligible for the start-up business current account:

    • The business must be in the initial year of trading
    • The account must be the first business current account opened with Santander
    • The business must have up to 2 partners, directors, or owners

    In case the business does not meet the above mentioned conditions, the business will be required to apply for the business current account. The criteria includes

    • A prevailing business that is altering its legal entity type, for example, from sole trader to limited company or partnership
    • A prevailing business that is growing, for example, opening other outlets

    TSB

    TSB

    Reasons to select TSB’s start-up account for the business

    • 18 months' free everyday banking: Its free everyday banking can make a lot of difference to a new business. The service ensures that every single penny earned by the business goes towards creating a successful business. Its benefits encompass
      • Banking on the computer through its internet banking service which is presently used by over half of business customers
      • Banking on the doorstep as the bank has a large branch network in the United Kingdom, so there should always be a branch nearby
      • Banking on the mobile by receiving daily updates on the account balance via text alerts
      • Banking on the phone by speaking to a business advisor who can deal with account queries and requests using Internet Banking demo service

    During the initial 18 months, the business will not be charged for:

    • Paying-in or withdrawing cash
    • Issuing or paying-in cheques
    • Paying direct debits and standing orders
    • Unlimited withdrawals and deposits
    • No minimum account balance required
  • Select the tariff that best suits the business: Once the free banking period ends, the business owner(s) will have the option of moving to one of the alternative tariffs. Businesses can select the one best suited for their business

    • Fixed Fee Account: Simply pay a fixed monthly fee for a certain number of transactions - with five levels to choose from to suit business needs

      Fixed fee account Monthly fee Maximum transaction per month
      A £5.0 5
      B £10.0 20
      C £15.0 35
      D £25.0 70
      E £40.0 125

    • Business Extra Tariff: Pay individual charges per transaction instead of a fixed monthly fee. This tariff is suitable for customers who use large cash transactions. There is an account maintenance fee of £5 per month for using this account type. Advantages include: separate charges for every transaction; free-cash-drawings from any TSB cash machine; free transfers from and to an additional TSB account in the business’s name (with the sort code starting 30, 77 or 87).

    • Electronic Business Tariff: If the business uses electronic or automated ways of banking, they can take advantage of lower charges for these types of transactions. Here, the business pays for individual transaction, rather than a fixed monthly fee. There is an account maintenance fee of £5 per month for this account. Advantages encompass: individual charges per transaction; reduce cost-charges for automated or electronic transactions; free direct debits; free BACS credits or debits; free debit card transactions (excluding ATM).
  • Manage account online, by phone or at one of bank’s 631 high street branches
  • Get backing with all i.e. deposits to loans from the relationship manager TSB’s business debit cards make available quick, easy, and economical way to settle everyday business expenses for customers. Key features: withdraw money from a cash machine; no annual fee; saving on cheque transaction costs

  • NatWest

    NatWest

    The Bank provides the following services to assist start-up businesses

    • Anywhere banking through the mobile app
    • Dedicated ‘start-up package’
    • 18-months free business banking, before standard published tariff applies
    • 24/7 telephone and online banking NatWest ‘start-up business account' is obtainable by businesses which have been operating for a period less than 1 year and have an existing or estimated revenue of mot more than £1m. This account can be used on the bank’s mobile banking app
    • Benefits or advantages of the account comprise

  • Managing cash flow is stress-free: Since the business can use the account 24/7 through the app or online, the customers knows precisely where they stand. Customers can see details about all credit and debit transactions and what invoices have been paid
  • Free accounting software access to FreeAgent, which makes book-keeping really simple and easy
  • Businesses get concession on DHL Express up to 60%, off the normal charge for 12 months on world-wide shipping, when the owner unlocks a DHL Express account

  • Halifax

    Halifax

    Halifax Business Banking is managed by Bank of Scotland and together they form part of Lloyds Banking Group plc. The bank offers an all-inclusive variety of business banking products and services to assist in managing the business finances competently. In case the business revenue is not more than £1mn for an annual, Lloyds Group has valuable business banking products. In case the figure is in excess of £1mn, the corporate banking division too offers pronounced products and services to suit the business needs. The Business Current Accounts products and services can be managed through a local branch, over the phone, or online providing an operative solution to manage everyday spending. New business account offering encompasses

    • 18 months’ free everyday business banking for new businesses
    • Devoted support from its United Kingdom based business management team
    • Take the business to a great start with its simple current account
    • Free electronic payments and simple pricing

    RBS

    RBS

    The Bank provides the following services to assist start-up businesses

    • Anywhere banking through the mobile app
    • Devoted ‘start-up package’
    • 18-months free business banking, before standard published tariff applies
    • 24/7 telephone and online banking

    Business banking services of Royal Bank of Scotland are accessible to qualified clients, above 18 years of age. Customers must have a Royal Bank of Scotland business bank account to use the mobile app. The Mobile app is accessible to Digital Banking clients with an international or United Kingdom mobile number in specific countries. Additionally, the FreeAgent service is presently available free of cost to Royal Bank of Scotland customers. To qualify for this right to use, the clients will be required to agree to share FreeAgent information with Royal Bank of Scotland. Here, free banking does not include ‘bank-line charges’, ‘unarranged borrowing’ etc.


    Brief comparison

    Bank Account Type Interest rate (AER) Monthly fee Overdraft rate (EAR
    Yorkshire Bank Start Up/Switcher Business Current Account 0.00% For the initial 25 months no monthly fee Negotiable rate Yes
    HSBC Start-Up Business Account 0.00% For the initial 18 months no monthly fee Negotiable rate
    Santander Start-Up Business Current Account 0.10% For the initial 18 months no monthly fee 5.5% (variable) Yes Yes Yes Yes
    Cashplus Start-Up Business Account 0.00% No monthly fee Upon invitation Yes

    Contact DNS for any help

    DNS can help start-ups, in the United Kingdom, to open a business bank account and assist them in selecting the best business bank account based on the business structure. DNS helps clients to create a business bank account application, and assisting in submitting the correct documents such as

    • Proof of identity (examples include driving licence or passport)
    • Proof of address (examples include bank statement or utility bill)
    • Registered address and name of the business
    • Nature of the business
    • Copy of the business plan

    When an individual starts operating a limited company in the United Kingdom, it is imperative to have a UK business account and DNS can introduce businesses to the most trusted service providers. The business development team at DNS has assisted numerous clients in setting up a business account. Additionally, it also offers opening bank account for non-residents.

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