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Choosing your business bank account 💳

Updated: Dec 19, 2022

Not all businesses need a "business" bank account. Many sole-traders and partnerships have operated perfectly well, and legitimately, using personal bank accounts. However, with the introduction of Making Tax Digital (MTD) for Income Tax all businesses will need to ensure that their business banking is separated from the owners personal banking.

Top tip 💡 Take the time now to set-up a separate bank account for your business well ahead of the MTD go-live date.

Choosing your business bank account

Most businesses will be best served by the bank accounts listed here:

Generally, these offer: Access online, in branch and or at The Post Office. Allow cheque and cash deposits and overdrafts.

Monthly fees range from around £7 - £12 (usually after an introductory free period)

Our experience is generally good with all the High Street Banks. As for the newer Challenger banks we prefer Starling over Tide (for more detailed bank statements and better integration with bookkeeping apps).

There are two online-only options offering free business banking:

There may be charges for occasional banking in branch or at the Post Office. Both allow Integrations with bookkeeping apps. Virgin's M Account is available to most small businesses including partnerships, whereas the Mettle account is restricted to sole-traders and small limited companies. However, Mettle has one great advantage - free access to the online bookkeeping app: FreeAgent

Generally, we don't consider FreeAgent to be one of the better bookkeeping apps, but we do understand the attraction of combining free business banking with free bookkeeping software. That being the case we suggest the Mettle account is best for:

  • Very small sole-traders or single-director limited companies with no intention of growing beyond the VAT threshold

  • Businesses with low bookkeeping requirements (i.e. 1-2 sales invoices per month)

  • Or as a Rental Income only bank account for a sole landlord (unfortunately this is not suitable for joint rental income, including between husband and wife)

We hope this guide has been useful in choosing your new business bank account or evaluating your business banking arrangements ahead of the Making Tax Digital (MTD) for Income Tax go-live date.

Would you like help to pay less tax? Feel free to get in touch or check out our related posts 👇


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