One of the fundamental things to understand when contracting through a private limited company is that the business is a separate legal entity to you. This means that any money which is held within the company belongs to the business and not you. Saying this though, surprisingly there is no legal requirement for your limited company to have its own bank account.
So, if there’s no legal requirement to have a business bank account, why should you open one? Let’s find out.
Life is meant to be simple
If you choose to use one account for both business and personal use, things can quickly get ‘messy’. When it comes to doing your company’s accounts, you’ll have to spend time working out which expenditure is for business and which is personal. Even, if you’re meticulous about keeping organised records, it is very easy to make a mistake which could be costly to fix.
We strongly believe that life is meant to be simple, and we advise all contractors to open a business bank account.
Saying that it can be difficult to know where to start looking. Our article ‘What to consider when choosing a business bank account’ offers valuable tips on what to include in your search.
Now that we’ve covered why you should open a company bank account, let’s see which banks are offering the best deals.
Business bank accounts for limited companies
Nearly all of the established high-street banks offer business bank accounts, but there is a growing number of ‘disruptor’ banks who are offering variable deals and these are also worth looking at:
Santander is a British bank with Spanish owners. It is one of the most recognisable names in banking and has over 800 branches. Currently (April 2019) it’s offering a business bank with:
|No fee (for first 12 months)||0.1% AER on in-credit balances||£500 – £2500 subject to acceptance|
HSBC is the 7th largest bank in the world and its head office is based in Hong Kong. It’s estimated that they have around 1,100 branches in the UK. Currently (April 2019) it’s offering a business bank with:
|No fee (for first 18 months)||0% AER on in-credit balances||Rate is negotiable|
Cashplus is different in that it isn’t actually a bank but a provider of banking services. However, they are authorised and regulated by the FCA. Currently (April 2019) it’s offering a business bank with:
|No fee – but there is a £69 annual fee||0% AER on in-credit balances||Upon invitation|
Yorkshire Bank was set up in Huddersfield in 1859. Today it is a subsidiary of Clydesdale Bank and its branches can mainly be found in the North of England. Currently (April 2019) it’s offering a business bank with:
|No fee – for first 25 months||0% AER on in-credit balances||Rate is negotiable|
Tide is deemed as a ‘disruptor’ bank. This means it belongs to the new wave of fintech apps that are offering an alternative to the traditional banking system. Tide only offers business current accounts to small businesses, freelancers and contractors. Currently (April 2019) it’s offering a business bank with:
|No fee||0% AER on in-credit balances||Not available|
Metro Bank was voted the 2nd-best business bank account in the UK and it’s easy to see why. Metro Bank understands that contractors don’t live in a 9-5 world, so they work around you. Their offering brings great customer service, with branches open early til late from Monday to Sunday. You also get 24 hour Customer Support. Currently (April 2019) it’s offering a business bank with:
|No fee (for balances over £2,000)||0% AER on in-credit balances||Available|
We’re a proud partner of Metro Bank. There’s usually a fee on balances under £5,000, but when you take out an account through us there are no fees for balances under £2,000. It’s a little extra something for you. We can get you set up with a business bank account with one of our contractor accounting packages.
For advice on how to set up a business bank account for your limited company, talk to one of our Directors on 01962 867550 or send us a message via our website.