Best business bank accounts for the self-employed and sole traders (2024)

It can be a good idea to create a separate bank account to manage your finances when you’re self-employed. A number of providers offer bank accounts that have been designed for those who are self-employed.

Reviews of self-employed business accounts

Revolut - Revolut Business Free

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★★★★★

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• Why it’s great
• Pros/cons
• Details

Sign up today and unlock 1 month of a paid plan without subscription fees.

If you're self-employed, there are 3 different pricing plans to choose from with the Revolut business freelancer account. The first is a free option which can be great if you're only looking for a few basic features and are just starting out. Alternatively, you can pay a monthly fee to benefit from additional features including a larger number of fee-free international payments and local payments. Paid-for plans also offer a free foreign exchange allowance, making it a good option if you often do business overseas. You can hold and exchange more than 25 currencies with the account. Further benefits include the option to connect to accounting software such as Xero, QuickBooks and Slack, and the ability to create and track invoices. It's quick and easy to sign up to an account via the Revolut app.

• Flexible account options
• Mobile app with lots of good features
• Ability to issue cards to all employees
• Easy to apply
• Freeze card if lost or stolen
• Safe and secure
• Free purchases

• Free account does not include many free transactions
• All ATM withdrawals incur a charge
• Can't deposit cash or cheques into your account
• Not yet a fully fledged bank
• Currently unable to earn interest
• Direct debits only available for EUR accounts

Account fee	N/A
Bank transfers	N/A
Accounting integrations	FreeAgent Xero
Requires credit check	N/A
Overdraft	N/A

HSBC - HSBC Kinetic Current Account

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★★★★★

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No monthly account fee for the first 12 months.

This everyday business bank account from HSBC has no monthly maintenance fee for the first 12 months, making it ideal if you're only recently self-employed. The fee is £6.50 per month after this. You can apply for the account in minutes via the app and most accounts are opened within 48 hours. The account lets you manage direct debits, standing orders and future payments with ease. Customers can also apply for an overdraft of up to £30,000 in-app, get insights on their business spending with automatically categorised transactions, and keep track of their finances with a monthly breakdown of cash flow. You'll also be able to freeze your debit card if you misplace it, and unfreeze it again when found. Plus you can scan and deposit cheques in the app and make payments of up to £25,000 per day. Larger payments can be made via business telephone banking.

• Easy to apply for and manage
• Arranged overdraft
• Useful app features to help you track spending
• No monthly fee for 12 months

• Interest is charged on overdraft
• Monthly maintenance fee applies after first 12 months
• No interest paid on credit balances

Account fee	N/A
Bank transfers	N/A
Accounting integrations	QuickBooks Sage Xero
Requires credit check	N/A
Overdraft	N/A

See Also

The 10 Best Business Bank Accounts for an LLC [2024]How to Open a Business Bank Account in 3 Simple Steps | finder.comBest Business Bank Account for Shopify (2024)

Tide - Tide Free

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★★★★★

Customer rating

★★★★★

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Get a £50 voucher when you open a Tide business bank account.

You can choose between three different pricing plans with the Tide business account. This includes a free option which could be suitable for freelancers, sole traders and contractors. You can then upgrade your account at any time as your business grows, but a monthly fee will then apply. All options enable you to sync your account with accounting software like Quickbooks, Sage, KashFlow and Xero, as well as automatically categorise transactions, send, pay and track invoices and upload receipts. ATM withdrawals cost £1 each, while other transaction fees will depend on the plan you have chosen. You can hold up to 5 business accounts and get 'read access' for team members, allowing them to view and download transactions. Opening an account can take as little as 10 minutes and no credit checks are carried out. Your Tide card should arrive within 2 to 4 working days.

• 24/7 customer support
• Categorised spending
• FCA regulated
• Quick set-up
• No monthly fees
• Easy to manage accounts and track payments within the app
• Ability to set up direct debits and standing orders
• Can receive online bank statements

• No branches - all done via the web
• Doesn't accept cheque deposits
• No personal accounts
• No international transfers or interest offered

Account fee	N/A
Bank transfers	N/A
Accounting integrations	Clear Books FreeAgent KashFlow QuickBooks Reckon One Sage Xero
Requires credit check	N/A
Overdraft	N/A

Starling Bank - Business Current Account

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★★★★★

Customer rating

★★★★★

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• Pros/cons
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This business account from digital bank Starling has no monthly fees or UK payment charges, making it ideal for sole traders and limited companies. You can apply for the account with ease via the app and you'll also benefit from free 24/7 UK support via the app, phone or email. You can integrate the account with accounting software Xero, Quickbooks and FreeAgent, as well as benefit from automated business spending categorisation, receipt capture, free ATM withdrawals and fee-free spending on your card abroad. You can also choose to pay to bolt on extras such as a Business Toolkit to create and send invoices, record VAT and submit your VAT return, and carry out HMRC tax calculations. Or you can open a Euro business account for exchanging and holding euros and a US dollar business account for holding, sending and receiving US dollars.

• Add the new Business Toolkit onto your free Starling account and get the first month free of charge (RRP £7pcm)
• Completely free UK current account opened and ready to use in 20 minutes
• Safe and secure
• Fully licensed by the FCA and PRA
• Free to use your card abroad including ATM withdrawals, splitting the bill made easy with "settle up" feature, competitive and comprehensible overdraft fees
• Decent interest rate paid on current account balances
• Efficient app offering a range of good features such as budgeting tools and saving features
• Has a marketplace offering competitive pensions
• Mortgages and insurance from other growing fintech companies
• Teen account options
• 24/7 customer support (for all types of enquiries)

• Relatively new so does not offer every feature, e.g. mortgages
• No bank branches, all done via the web
• Only available to UK residents

Account fee	N/A
Bank transfers	N/A
Accounting integrations	FreeAgent QuickBooks Xero
Requires credit check	N/A
Overdraft	N/A

Mettle by NatWest - Mettle by NatWest - Mobile business bank account

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★★★★★

Customer rating

★★★★★

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Get FreeAgent included - all you have to do is make at least one transaction a month from your Mettle account.

One of the biggest draws of this business account from Mettle is that it's completely free to use. You can also apply in a matter of minutes from the app. Mettle is part of the NatWest Group and its account offers a range of features and benefits. These include assistance with invoicing, the option to set up Money Pots so that you can save for things like tax and new equipment, plus an overview of your cash flow at any time so you can keep track of your spending and income. You can also sync the account with accounting software such as FreeAgent, QuickBooks and Xero. To apply you must be a sole trader or limited company with up to two owners, and have a balance of less than £50,000 for sole traders, or £100,000 if not. You must also be a UK-based company and be a UK resident.

• Quick and easy application
• Freeze your card if you lose it
• Free, with useful features
• Backed by the Natwest group
• Sleek easy to use app

• Overdrafts are unavailable
• Daily payment limit of £10,000

Account fee	N/A
Bank transfers	N/A
Accounting integrations	FreeAgent QuickBooks Xero
Requires credit check	N/A
Overdraft	N/A

Cashplus - Cashplus Business Go Bank Account

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★★★★★

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No annual or monthly fee when you apply using the Finder link.

The Cashplus business account charges no monthly fee and no fees for UK purchase transactions. Signing up for the account can be completed in a matter of minutes and once your application is approved, your card will arrive in 3 to 5 working days. Once your account is up and running, you can deposit cash via bank transfer or the Post Office, use your card online and instore or to withdraw cash, pay bills and expenses online and categorise spending on the go via the app. You'll also be able to track expenses and block certain transactions, order up to 20 additional cards, download statements for each card in CSV format online, manage cards via a centralised management system, and integrate your account with accounting software. Funds are also protected up to £85,000 by the Financial Services Compensation Scheme.

• Open an account in 5 mins
• "Cashplus iDraft" once eligible
• Currency cards for travel
• Online services in addition to the mobile app

• Charge to have your bank card issued
• Traditional bank still needed for majority of your business finance needs

Account fee	N/A
Bank transfers	N/A
Accounting integrations	Clear Books FreeAgent KashFlow QuickBooks Sage Xero
Requires credit check	N/A
Overdraft	N/A

Do I need a business bank account or can I use my personal one?

If your business is set up as a partnership or a limited company, you’ll have to run your business finances through a business bank account, for tax and legal purposes.

If your business is a sole proprietorship, you are still taxed as an individual, so there’s no obligation for you to open a business bank account.

However, you may still find it useful to separate your business and personal expenses. Learn more about using your personal bank account for your business.

Can you transfer money from a business account to a personal one?

Yes, most business owners will pay themselves a salary – and perhaps an occasional bonus – from their business account into their personal account.

The important thing to do is to record and declare these transactions, for tax and bookkeeping reasons.

In many cases, these payments will be delivered automatically using a payroll software provider, so that they are automatically recorded and the taxes are paid.

If your business is set up as a partnership or a corporation, all one-off payments to your personal account will need to be signed off by your business partners.

Why is a business bank account useful for sole traders?

Although it is not a legal requirement, there are many advantages to having a business bank account as a sole trader.

• Using your personal account for your startup business or side hustle might work at first, but as you start to carry out more transactions, your finances can quickly become overwhelming! This is especially true when transactions are not labelled clearly, or you want to keep an eye on the cash flow of your business separately from your personal finances.

  If you choose to set up a business bank account, you’ll find it much easier to track how your business is doing as a sole trader, especially when you have many other responsibilities to keep you occupied.

• As a sole trader, you are responsible for reporting your tax bill to HMRC at the end of the financial year. If you’ve been using a specific business account for all your business-related transactions, this process will be a lot quicker and easier and save you from the headache of tracking everything down.

• Many business bank accounts come with additional features that will make your life easier if you are a sole trader trying to manage your business’s day-to-day operations.

  Some of these include:

  • Interest rate
  • Invoice creation
  • Expenses management
  • Spending pots or categorisation
  • Budgeting tools
  • Tax and VAT calculators
  • Payment notifications
  • Setting up standing orders for expenses

  If you use accounting software, you may also be able to link this with your business bank account through accounting integrations.

• Many business accounts offer benefits, such as cashback when you spend with your business card. You can also get additional physical debit cards for your employees.

• Finally, having a dedicated business account helps you appear more professional to your customers! It helps them to feel safe that they are sending their money to the right place and that your business is legitimate.

How to choose and compare a bank account for a sole trader

As with any financial product, the key to finding the best business bank account is to shop around and compare your options.

As part of your comparison, you’ll need to consider which features are the most important to you. For example, are you willing to pay a monthly fee or would you prefer a free account? Keep in mind that there may still be charges for certain transactions such as transfers and cash withdrawals.

You should also think about whether you might need an overdraft, whether you want your account to link to accounting software such as QuickBooks and Zero, whether you need invoicing support and whether you need to regularly bank overseas.

Don’t forget to also consider how you want to manage your account. Are you happy to bank solely online/via an app or would you like the option of being able to pop into a branch? When you’ve considered these options, you should find it easier to find the right account for you.

What does a sole trader need to apply for a business bank account?

The application process varies between business account providers, but you will always need the following:

• Your business name and address
• Your own personal details and contact information
• A form of ID
• Proof of address
• Estimated business turnover
• Personal banking/financial statements
• Companies House registration number, if you’re a limited company

Pros and cons

Bottom line

For most types of business, it is compulsory to have a business bank account. Even if this isn’t the case for them, the majority of business owners recognise the advantages of opening one. The key benefit of opening a separate bank account for a sole trader’s business revenue is that this helps with tax calculations and enables the business owner to understand their cashflow situation easily.

Frequently asked questions

• No. If you run a limited company, then that company is a separate legal entity and therefore needs a separate business account.

• Yes. It’s more common to find these accounts offered by digital ‘challenger’ banks like Starling and Tide.

• As a general rule of thumb, your business account is likely to allow you to accept payments in foreign currencies, particularly in euros and US dollars. While some accounts will charge you a conversion fee, others will use either Mastercard or Visa’s own exchange rates. These rates are as close to perfect as it’s possible to get for converting between major currencies. It’s best to check you accounts terms and conditions to find out more.

• As a self-employed person you can usually claim bank charges as a business cost. The Gov.uk website has full details on self-employed expenses.

• It is possible that you’ll be credit checked when opening a business account as a sole trader.