Choosing a bank account for your startup is one of the most important decisions you’ll make. But what should you be looking for in a startup bank account and which banks offer the best?
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Unlike personal accounts, businesses rarely make the switch from one bank to another which often means they miss out on money-saving deals. As a startup, you’ll be keen to get the bank account for your new business but what factors do you need to consider when choosing one?
What startups should look for in a business current account
- Fees – unlike personal bank accounts, it is rare to find a start-up bank account that is free. Banks will offer free banking for a certain length of time and so if this is important to you, then check out how long banking is free for.
- Look for introductory offers – banks are like other retailers and will offer a range of enticing offers. Whilst these may work for you initially, be aware of just how much the bank account will cost you when this offer ends.
- Services – in many instances, you’ll need your startup business account to work hard from the moment you open it. But you might also need a hand to manage the account. If you have a problem, what level of customer service does the bank offer? You might also want to tap into an overdraft, credit cards or loans in the future. In other words, check how scalable your startup business account is.
- Requirements & preferences – as a startup, you’ll be clear about how your business will operate. For example, if you are an online e-commerce business, the likelihood is you’ll have minimal cash deposit but if you have a high street business, it could be that you need to make over-the-counter deposits daily or weekly. Make a list of your requirements and preferences and look for a startup bank account that offers these services and at a reasonable price.
- Financial protection – the Financial Services Compensation Scheme protects the first £85,000 of your money at banks and building societies, and other financial institutions, regulated by the Financial Conduct Authority and Prudential Regulation Authority. Check that your money is protected.
The best startup business bank accounts compared
Challenger banks have risen to prominence in recent years and so as a startup, you have both high street and online or mobile banks to choose from. How do they compare?
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Here are the best business bank accounts:
- Starling Bank
- Anna
- Tide
- Yorkshire Bank
- Mettle
- Cashplus Business
- Revolut Business
- Kinetic
- Metro Bank
- Bank of Scotland
Starling Bank
If there is one challenger bank that has created waves and changed the banking landscape in the UK, it is Starling bank. With a 3% market share, it is the fastest-growing bank in Europe.
Founded by Anne Boden, this bank has simplified every aspect of personal and business banking. For any startup, a Starling business account is a great place to start but because their service is simple, free and scalable, you’ll be hard pushed to find a reason to leave.
Open an account via their app, which is available for both iOS and Android. Excellent customer service via in-app messaging.
ANNA
With the number of startups in the UK expected to grow, new businesses are looking to the banking industry for new and innovative banking products. ANNA is one of the online or mobile banks that does exactly that.
It has a no-fuss, no-nonsense approach to banking and so when it comes to pared-back simplicity, this is the ideal online bank. That said, for a business that grows quickly, it may not be the most scalable or responsive as a result.
Tide
Like other banks, Tide offers three packages to business customers so that businesses can scale their accounts as they grow. There is their basic account, Tide Plus and Tide Premium. For a startup, this means that there are stepped options to grow with the bank as your business finances become more complex.
The pay-as-you-go Tide account, the most basic one, has options for more than one card, ideal if you want your team to be able to pay for items. You can also open up to 5 different accounts, great for saving or ring-fencing money when you need to.
Yorkshire Bank
Fourth on our list of startup bank account providers is a high street bank, the Yorkshire Bank. Widely lauded for its free 25 months of banking for new business customers, there are many plus points to considering this bank for a startup account.
But, if you want a responsive app or digital access to your account, then this may not be the account for your startup. Customer phone support is excellent, however, and they are making moves to improve their digital presences.
Mettle (by NatWest)
NatWest, part of the Royal Bank of Scotland, is one of the Big Four high street banks and, as you would expect, has a range of account options for business customers.
Mettle is their answer to the challenge laid down by online and mobile banks. Started in 2019, it promises to help startups and small businesses scale when they need to and have control of their finances, online and in-app.
Cashplus Business
Packed full of features, it’s no wonder that Cashplus Business is attracting a lot of attention. It does have an annual fee, however, but for new customers, this is refunded at the end of the first year.
If you have poor personal credit, then the fact that they make no credit checks will be attractive. With an accessible app and website, keeping tight control of your business finances in the early months of business is relatively simple.
Revolut Business
Another challenger bank that is making waves for all the right reasons, Revolut offers a great account for startups. It has all the usual features, with its costs and fees on a par with its main online banking rivals. Where it does differ is the efficient and secure sending of different currencies.
It’s also the only bank on the list that is set up for eCommerce customers. It will easily accept payments from your checkout page with plugins from WooCommerce, Magento 2.0 and PrestaShop.
If you are a startup with cross-border ambitious, then this could be the bank account for you. There is only one note of caution and that is the fees you’ll be charged if you exceed limits of your specific pricing plan.
Kinetic by HSBC
Kinetic by HSBC promises to be the bank account that every business will need and providing you meet the eligibility criteria – limited company or sole trader not opening the account for the sole purpose of a bounceback loan – then you could be enjoying this bank account within minutes.
It does everything you expect it too with a well-designed app. But this app is not available on Android at the moment.
Metro Bank
Metro is the UK’s newest bank, opening in 2010. It is trying to be a high street bank with a challenger bank outlook, a goal it appears to be achieving.
It offers a range of business account packages including one for small business with a turnover of less than £2million. For most startups, this will be their ideal first business account.
Bank of Scotland
Another major player on the high street, the Bank of Scotland, has a simple yet effective business account that some startups could find meets their needs.
For a whole year, as a startup, you can enjoy free everyday banking services, but you’ll need to keep an eye on charges and fees after this, although there is no charge for electronic payments. Rates vary depending on the value of cash deposits made, with a fee of 85p per cheque pay in and out.
You can also accept card payments on the phone or online through Lloyds bank’s Cardnet. With no joining fees, it could be the secure online payment system you are looking for.
Features and costs compared
| Bank | Monthly fee | Card purchases | Bank transfers | Overdraft | Great for |
|---|---|---|---|---|---|
| Starling Bank | Free | Free | Free * T&C apply | ✓ | Customer service Easy to use app |
| ANNA | £0 – £19.90 | Free | Free * T&C apply | ✗ | Intended for sole traders and small business who want a simple bank account |
| Tide | £0 or £9.99 or £49.99 | Free | 20p Free on paid-for accounts | ✗ | There are balance limits for sole traders and limited companies, as there are receiving and sending amounts |
| Yorkshire Bank | £60 annual fee | 30p | 65p | ✓ | One of the best offers from high streets available with two years of free banking |
| Mettle | Free | Free | Free | ✗ | Open online or in-app Not as well-known as other accounts but has good reviews so far |
| Cashplus Business | Annual charge £69 | Free | Free | ✗ | No credit checks First year’s fees refunded |
| Revolut Business | £25 | Free | Free * T&C apply | ✗ | Hold, exchange, send and receive funds in 28+ different currencies Ideal for eCommerce |
| Kinetic by HSBC | Free for 18 months then £6.50 per month | Free | Free | ✓ | Makes big promises but is so new, there are few reviews Limit of £3k cash deposits monthly – after this you will be charged 0.50% per transaction |
| Metro bank | Free providing daily balance exceeds £5k. Under this amount, the £5 a month fee applies | First 50 per month free, then 30p each. This is across all transactions including bank transfers | First 50 per month free, then 30p each. This is across all transactions including bank transfers | ✓ | Dedicated account manager A growing number of branches in and around London |
| Bank of Scotland | £7 but free for 12 months | Free for 12 months | Free for 12 months | ✓ | Promises simple and fair charging after 12 months |
For efficient and secure online banking, look closer at what the challenger banks are offering such as Starling bank. It is also worth examining paid-for or premium packages as for a monthly fee, you could find you save a lot of money on cash deposits and transfers etc.
High street banks are upping their game too with some great products that startups will find enticing. Check the small print when it comes to fees, however.
Startup bank account FAQ
Challenger banks have revolutionised the way accounts are opened by connecting with Companies House to seek information on limited companies. For sole traders, they can upload documents by using the in-app camera. Using a driving licence or passport also proves your identity. You also submit a short piece of video confirming you are who you say you are.
With these checks in place, you will be asked for further information on your business, including address and other details. Extra information may be required in the shape of a business plan, although this doesn’t have to be a long or detailed plan at this stage.
For high street banks, the process is much the same although if you are planning to make use of overdraft and other credit facilities, cash flow projections and a solid business plan will be needed.
The answer to this depends on what you need your business account to do:
Foreign currency payments – if you trade in different currencies, the Revolut Business offers an excellent account.
Accessible – Starling bank is undeniably the winner with a range of free services that are ideal for startups.
Simple – ANNA offers a great bank account for a very small fee which includes plenty of tools to keep your account organised.
Prices vary with simple accounts being free, rising to £6.50 a month up to to £49.99 a month for the premium account from Tide.
There are also fees for day-to-day activities such as paying in cash or cheques over the counter or in The Post Office. Some banks charge a flat fee per transactions whilst others charge a % of the value. Some accounts offer a limited number of free transactions.
Unlike personal accounts, business accounts are rarely free and so check the fee structure.
It is not a legal requirement but for both professionalism and efficiency, it is a wise move for a limited company to open a bank account. This allows for easier accounting too.