Business Accounts for Limited Companies

Business bank accounts for limited companies: what to know

A limited company is a separate legal entity from its directors and shareholders, so its finances must be kept separate from personal money.

A dedicated business account provides a clear place for company income and expenses and can make it easier to manage payments, maintain financial records and work with an accountant.

Business accounts for limited companies can differ significantly in their monthly fees, transaction costs, accounting integrations, payment tools, international features and access for additional users. Before choosing an account, consider how your company actually receives, holds and spends money rather than looking at the monthly fee alone.

Does a limited company need a business bank account?

A limited company is legally separate from the people who own and manage it. Company finances therefore need to be kept separate from the personal finances of directors and shareholders.

In practice, a dedicated business account is the usual way to receive company income and pay company expenses while maintaining this separation.

The account should be used for transactions belonging to the company rather than personal spending. Keeping a clear distinction can also make bookkeeping, accounting and preparation of company records easier.

When comparing accounts, check that the provider accepts limited companies and that your company meets its eligibility requirements.

How to choose a business account for a limited company

The features that matter most depend on how your company operates.

A small company with one director and a limited number of UK payments may have relatively simple requirements. A company with employees, several directors, international customers or a high volume of transactions may need additional features.

Some of the main factors to compare include:

Monthly fees and transaction costs

Some limited company business accounts have no monthly account fee, while others charge a fixed amount each month.

The monthly fee is only one part of the overall cost. Depending on the account, you may also pay for transfers, cash deposits, international payments, foreign currency transactions, additional cards or other services.

Consider the transactions your company is likely to make regularly when comparing the likely cost of different accounts.

Multiple users and employee cards

If more than one person manages your company's finances, check whether the account supports additional users and what permissions can be assigned to them.

Some business accounts also offer additional physical or virtual cards for directors or employees.

Features such as spending limits, payment approvals and individual card controls can be useful for companies where several people need to make or manage business payments.

Availability and charges vary between providers.

Accounting software integrations

Some business accounts integrate with accounting platforms such as Xero or QuickBooks.

Connecting your account to accounting software may make it easier to reconcile transactions and maintain company records.

Depending on the provider, accounts may also include features such as expense categorisation, receipt capture, invoicing or transaction exports.

Check whether these tools are included in the account or require a separate subscription.

International payments and multi-currency accounts

Companies dealing with overseas customers or suppliers should consider the cost and availability of international payments.

Relevant factors can include:

Some providers offer multi-currency functionality, while others focus primarily on sterling transactions.

Cash and cheque deposits

Companies that regularly receive cash should check whether cash deposits are supported and how they can be made.

Some providers use branches, Post Office locations or other third-party networks, while some digital accounts may have limited or no cash deposit facilities.

Fees and deposit limits may also apply.

Overdrafts and business borrowing

Not every business account includes access to an overdraft or other borrowing facilities.

If your company may need short-term borrowing, check whether an overdraft is available and review the provider's eligibility requirements, interest rates and fees.

Opening a current account does not necessarily mean your company will qualify for credit facilities.

Account protection

It is important to understand how money held in a business account is protected.

Eligible company deposits held with a UK-authorised bank, building society or credit union may be protected by the Financial Services Compensation Scheme (FSCS), subject to the scheme's eligibility rules and applicable protection limit.

Some providers offering business accounts are electronic money institutions rather than banks. Relevant customer funds held by these providers are generally protected through safeguarding arrangements instead of FSCS deposit protection.

The protection available therefore depends on the provider, the legal entity actually holding the money and the eligibility of the depositor.

What features should a limited company business account have?

There is no single set of features that every company needs. The most useful features depend on how the business operates and who needs access to the account.

Multiple users

Can allow directors or authorised staff to access and manage the account

Additional cards

May help directors or employees manage business expenses

Payment controls

Can provide greater control over who can make or approve payments

Accounting integrations

May simplify bookkeeping and transaction reconciliation

Invoicing or expense tools

Can help manage routine financial administration

International payments

Relevant for companies dealing with overseas customers or suppliers

Multi-currency support

May be useful for receiving, holding or spending different currencies

Cash deposits

Important for businesses that regularly receive cash

Overdraft

May provide access to short-term borrowing, subject to eligibility

Rather than looking for the account with the largest number of features, consider which functions your company is actually likely to use.

Can a new limited company open a business bank account?

Newly incorporated limited companies can apply for business bank accounts, subject to the provider's eligibility and verification requirements.

Providers may need to verify both the company and the individuals associated with it before opening an account.

Being newly incorporated does not necessarily prevent a company from opening an account, but the provider may ask for information about the business, its activities and how the account is expected to be used.

What documents do you need to open a limited company bank account?

Requirements vary between providers, but an application may require information about both the company and the people who own or control it.

This can include:

Providers carry out their own identity, eligibility and business verification checks and may request additional information.

Can you open a limited company business account online?

Some providers allow limited companies to apply online or through a mobile app.

The provider will still need to complete the required checks before approving the account. Depending on the company structure and information provided, an application may be processed quickly or require additional documentation and manual review.

Can a limited company get a free business bank account?

Some providers offer business accounts for limited companies with no monthly account fee.

However, an account advertised as "free" or having "no monthly fee" does not necessarily mean that every transaction or service is free.

Depending on the provider, charges may apply for:

Some providers may also waive the monthly fee for an introductory period before moving the account onto standard pricing.

When comparing free business bank accounts for limited companies, check both the monthly fee and the charges associated with the transactions your company expects to make.

Can a limited company have more than one business bank account?

A limited company can have more than one business bank account, subject to the eligibility requirements of each provider.

Companies may choose to use separate accounts for different purposes. For example, one account might be used for everyday payments while another is used to set aside money for tax liabilities, payroll or other future expenses.

A company operating internationally might also use separate accounts or currency balances for particular currencies.

Using multiple accounts can add administrative complexity, so whether this is useful will depend on how the company manages its finances.

Bank or e-money provider: what's the difference?

Not every provider offering a business account is itself a bank.

UK-authorised banks and electronic money institutions operate under different regulatory frameworks, and this can affect how customer money is protected.

Eligible deposits held with a UK-authorised bank, building society or credit union may qualify for FSCS protection, subject to the scheme's eligibility rules and protection limit.

Electronic money institutions generally protect relevant customer funds through safeguarding arrangements instead. Safeguarding and FSCS deposit protection are different forms of protection and should not be treated as equivalent.

Some business account brands may also provide accounts or services through another regulated institution or partner bank.

Before opening an account, check which legal entity provides the service, where the company's money is held and what protection applies.

Compare limited company business accounts based on how your company operates

Different companies can have very different banking requirements.

A small company with one director may primarily need a straightforward account for receiving customer payments and paying expenses. A company with employees may place greater importance on additional cards and spending controls, while a business trading internationally may focus on multi-currency functionality and international payment costs.

The most relevant comparison factors are therefore those that reflect how your company expects to use the account.

Check the provider's latest fees, eligibility requirements, account features, terms and protection arrangements before applying.