How to Open a Business Bank Account
Rosie Goymour
Most business bank accounts can now be opened in under fifteen minutes online, without a single visit to a branch. That surprises people who remember the old process, weeks of paperwork, an in-person meeting, a wait for a card to arrive. The digital banks changed that. What still catches people out is not the application itself but what they have not prepared before they start.
The exact route depends on whether you are trading as a sole trader or through a limited company. The two processes overlap more than most guides suggest, but the documents you need and the checks the bank runs are genuinely different. Get the paperwork right on the first attempt and most applications clear within a day. Get it wrong and you can be stuck in a review queue for two or three weeks without knowing why.
What you need before you apply
Every provider asks for some form of identity and address verification before you can open an account. Have these ready and the application itself becomes a formality.
A valid form of photo ID, usually a passport or driving licence
Proof of your current address, such as a recent utility bill or bank statement
Your business details, including trading name and the nature of your business
An estimate of expected turnover and how you expect to receive payments
Limited companies need one thing on top of this list that sole traders do not. They must prove that the company exists as a separate legal entity, and show who owns and controls it.
Opening an account as a sole trader
If you are a sole trader, the bank is really assessing you rather than a separate business. There is no company registration to check, because your business is not a distinct legal entity from you. The application usually asks for your personal ID and address details, your Unique Taxpayer Reference if you have registered with HMRC, and a description of what your business does.
Most digital banks approve sole trader applications within a day, sometimes within minutes if your identity checks pass automatically. High street banks tend to take longer, often a week or two, because more of the process still involves a person reviewing your application rather than software.
You are not legally required to have a separate account at all as a sole trader. Plenty of people start out running their business through a personal account. It becomes harder to justify the longer you trade, particularly once Making Tax Digital for Income Tax applies to you. From April 2026 this covers sole traders with gross income above £50,000, dropping to £30,000 from April 2027. A dedicated account that connects to accounting software makes those quarterly submissions far less painful than untangling a personal account after the fact.
Opening an account as a limited company
For a limited company, opening a business account is not optional. The company is a separate legal person from you, and its money has to be kept apart from yours. Mixing the two is not just poor practice, it creates a real problem if HMRC or Companies House ever look closely at your accounts.
The application asks for more than a sole trader's does:
Your company registration number and incorporation details from Companies House
The names and details of directors and any person with significant control, usually anyone owning more than 25 percent of shares or voting rights
Proof of the registered office address
ID and address verification for each director who will operate the account
Banks are required to run anti-money laundering checks on every director and person of significant control, not just the person filling in the form. This is where limited company applications most often stall. If a co-director is slow to complete their part of the verification, the whole application waits with them. Sorting out who needs to provide what before you start saves the most common delay in this process.
Most digital business accounts also let you issue additional cards to co-directors or employees once the main account is open, each linked to its own spending controls. It is worth checking this at application stage if you already know you will need it, since some providers charge per additional card while others include a small number for free.
What happens after you submit the application
Once submitted, the bank runs identity verification, a credit check, and the anti-money laundering screening described above. Digital banks automate most of this, which is why they can often approve an account same day. Traditional banks still involve manual underwriting for business accounts, which is the main reason they take longer, typically one to three weeks.
A few things commonly hold up an otherwise straightforward application. A business name that does not clearly match your ID or company registration is one. A registered address that differs from your trading address without an obvious explanation is another. High-risk sectors, including cash-intensive businesses and certain financial services, can also expect extra questions regardless of which bank they apply to.
Free account or paid account
Most new business owners default to whichever account is free, and for most of them, that is the right call. A free digital business account covers day-to-day banking, mobile payments, and basic accounting software integration well enough for the first year or two of trading. There is little reason to pay a monthly fee before you know what you actually need from a bank.
Where it is worth paying attention is the parts a free account does not cover as generously. Transaction limits and cash deposit charges are the two that catch people out. If you take a high volume of card payments, or you regularly bank cash, check what a provider charges past its free allowance before you commit. A business that looks free on the surface can end up costing more than a paid account once those charges start applying every month.
To put the numbers on it, free digital accounts typically include a set allowance of card payments and one or two free cash deposits a month before charges apply. Go over that and you are often looking at 0.3 to 1 percent per cash deposit, or a flat fee per transaction once you exceed the limit. A business banking a few hundred pounds in cash occasionally will barely notice this. A market trader banking cash daily will find those charges add up fast, and is usually better off on a paid plan with a higher or unlimited cash allowance from the start.
For most new businesses, a free account from one of the digital providers is the sensible starting point. Move to a paid account once your transaction volumes or cash handling genuinely justify it, not before.
Getting started
The application itself is rarely the hard part. Gathering the right documents before you start, and making sure every director completes their verification promptly, is what actually decides whether you are banking within a day or waiting several weeks. Sort that first, choose a free account to begin with, and revisit the decision once your transaction volumes tell you whether you need more.
Frequently asked questions
How long does it take to open a business bank account?
Digital banks can approve sole trader and simple limited company applications within a day, sometimes within minutes. Traditional banks typically take one to three weeks for business accounts, largely because more of the process involves manual review.
Can I open a business bank account with bad credit?
Yes, though your options narrow. A poor credit history will not usually stop you opening a basic digital business account, since these focus more on identity verification than credit scoring. It is more likely to affect access to an overdraft or credit facility further down the line.
Do I need a business bank account as a sole trader?
There is no legal requirement, but most sole traders benefit from one once their income grows past a hobby level, particularly with Making Tax Digital for Income Tax now applying to those earning over £50,000.
What documents do I need to open a limited company bank account?
You will need your company registration number, incorporation details from Companies House, proof of your registered office address, and ID and address verification for every director and person with significant control.
Can I open a business bank account before my company is registered?
No. Banks require your Companies House registration number and incorporation certificate before they will open an account, so company formation has to come first.
Why has my business bank account application been delayed?
The most common causes are a director who has not yet completed their identity verification, a mismatch between your registered and trading addresses, or your business operating in a sector that requires extra anti-money laundering checks.
This article is for informational purposes only and does not constitute financial advice. Always seek independent advice before making financial decisions.
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