If you have set up a limited company in the UK, one of the first things you should do is open a business bank account in the company's name.
A limited company is a separate legal entity from you personally. This means the company's money belongs to the company, not directly to the director or shareholders.
Having a separate business bank account helps keep your company finances clear, organised and compliant, especially when working with online accountants for limited company support.
In this guide, we explain why a limited company should have a business bank account, whether you can use a personal account, what documents you need, how to choose the right account, what fees to watch out for, and why we often recommend Mettle for small limited companies.
For a limited company, the company finances must be kept separate from the finances of its directors and shareholders.
Because a company is a separate legal entity, there must be a clear division between the company finances and the owners finances. The simplest way to keep finances separate is to open a business bank account in the company name.
If you run a limited company, you should open a dedicated business bank account. This helps with:
Good to know: Keeping finances separate from the start makes year-end accounting much smoother and can help reduce your accounting costs.
You should not use your personal bank account for your limited company. Even if you are the only director and shareholder, the company is still separate from you personally.
Using a personal account can cause problems because:
Most personal bank account terms do not allow the account to be used mainly for business purposes.
Important: For clean records and fewer problems, your company should have its own business bank account from day one.
A limited company is legally separate from you personally. This means the company income, expenses and bank transactions should be kept completely separate from your personal finances.
Keeping a dedicated business bank account for your company makes it much easier to:
Good financial separation also helps when it comes to preparing your annual accounts and tax returns.
Related: To learn more about your year-end filing responsibilities, see our Limited Company Annual Accounts guide.
A business bank account is not just a place to receive payments. It is an important part of running your limited company properly.
The company income and expenses should flow through a company bank account. This makes it much easier to see what the company has earned, what expenses have been paid, how much cash is available, and whether money taken by the director is salary, dividends, reimbursement or a director loan.
A separate business bank account makes bookkeeping much cleaner. Your accountant can identify:
If personal and business transactions are mixed, bookkeeping takes longer and is more likely to contain errors.
One of the biggest mistakes new company directors make is mixing personal and business transactions together. Messy bookkeeping often means:
Tip: Keeping your records clean from the beginning can help reduce the time required to prepare your accounts. Learn more about our affordable fixed-fee services.
Your company pays Corporation Tax on its profits. A business bank account helps ensure your company records are accurate, making it easier to prepare annual accounts, Corporation Tax returns, management accounts and VAT returns where applicable.
Clients and customers are more likely to trust a business when payments are made to a company account. Receiving an invoice from ABC Services Ltd but being asked to pay Mr John Smith can look unprofessional and may raise concerns.
A business bank account may help your company build a financial record over time. This can be useful if the company later needs business loans, credit cards, overdrafts, trade accounts or finance agreements.
There are many business bank accounts available in the UK. The right option depends on your business type, how you receive money, and what features you need.
Some accounts charge a fixed monthly fee. Others offer free banking or free periods.
Some banks charge for:
Some business bank accounts connect directly to accounting software such as FreeAgent, Xero or QuickBooks. This can save time and improve bookkeeping accuracy.
Some accounts allow you to create and send invoices directly from the banking app. This can be helpful for freelancers, contractors and small businesses.
If your business receives cash, check whether the account allows cash deposits and what fees apply. Digital-only accounts may not be suitable for cash-heavy businesses.
If you pay or receive money from overseas, check foreign exchange rates, international transfer charges, supported currencies and payment limits.
Before choosing an account, always check the fee structure. A bank account that looks free at first may become expensive depending on how your business uses it.
Fixed charges for keeping the account open.
Fees per transfer or payment processed.
Charges for paying in cash over the counter.
Costs for sending or receiving foreign payments.
Charges if you need to borrow temporarily.
Many accounts charge after the introductory period ends.
For many new limited companies, freelancers and small businesses, Mettle can be a good option.
Mettle is a digital business account powered by NatWest and designed for small businesses and sole traders.
Learn More About MettleImportant: You are completely free to choose whichever business bank account provider you prefer. We simply recommend Mettle because many of our small business and limited company clients find it easy to use, quick to set up, suitable for day-to-day business banking, and helpful for bookkeeping and invoicing.
Quick and simple to apply from your computer or phone.
No monthly account charges for eligible businesses.
Full banking features through your smartphone.
Automatically sort your business spending.
Create and send professional invoices easily.
FreeAgent accounting software included, subject to eligibility.
This makes Mettle especially useful for small limited companies wanting simple banking and bookkeeping software together.
Mettle may not be right for every business. You may want to consider another provider if:
The best business bank account always depends on how your business operates and what features are most important to you.
Most banks will ask for information about:
Company name, registration number, registered office address, trading address
Nature of business, expected turnover, source of funds
Directors, shareholders, persons with significant control
Proof of identity, proof of address for all directors
You may also need:
Different banks have different requirements, so always check before applying.
This depends on the provider. Some digital banks can open accounts quickly if verification is straightforward. Traditional high street banks may take longer, especially if:
In practice: Opening a business bank account can take anything from the same day to several weeks depending on your circumstances.
Many new business owners choose to work with online accountants for limited company support because it allows them to manage their finances more efficiently from anywhere in the UK.
Using cloud accounting software alongside a modern business bank account can make it easier to:
At Taxwise Accountancy, we support limited companies across the UK with affordable online accounting services, bookkeeping support, payroll, tax returns and annual accounts.
Learn more: Online Accounting and Cheap Accountants Services
Do not mix personal spending with company transactions.
Bank feeds help keep bookkeeping up to date automatically.
Every business expense should be supported by evidence.
Director payments should be treated correctly as salary, dividends, expense reimbursements or director loan account transactions.
Set aside money for Corporation Tax, VAT and PAYE where relevant.
Watch out: These mistakes can make accounts more expensive to prepare and may create tax problems later.
Using a personal bank account for company business
Paying personal expenses from the company account
Taking money without recording it properly
Forgetting to save for Corporation Tax
Not keeping receipts for expenses
Mixing multiple businesses through one account
Choosing a bank account without checking fees
Before choosing a business bank account, ask yourself these questions:
Common questions about business bank accounts for limited companies
At Taxwise Accountancy, we help new limited company directors set up their finances properly from the start.
We can help with:
Learn about your year-end filing responsibilities as a limited company director.
Affordable online accounting and bookkeeping support for UK businesses.
Essential guide to what records non-VAT registered limited companies must keep for HMRC compliance.
Step-by-step guide to setting up and registering your UK limited company.