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If you run a small business, you need to keep track of your money. You might want to open a bank account for your business. We go over the steps you need to take to open a business account. If you’re just starting out, are a sole trader with a growing business, or want to hire people, you might need to open a separate bank account for your business.
Here, we explain how to open a bank account for a business. We talk about the documents you’ll need to provide before your account can be set up and how long it can take to open an account.
What Exactly Is A Corporate Bank Account?
A business bank account is used to isolate a company’s financial activity from that of its owners. Your status as a sole proprietor or as a limited corporation will determine whether or not you are required to have one.
A business bank account is a legal need if you operate as a sole proprietorship or a limited liability corporation (LLC). Since your business and you are separate legal entities, you must register a separate bank account for your limited liability partnership (LLP).
If you’re a sole proprietor, you’re exempt from opening a business bank account and can instead use your personal one. However, you may wish to open a separate business account to keep track of your company’s money.
Steps For Setting Up A Business Bank Account In The United Kingdom
As part of the application process to open a small business bank account, you’ll need to describe the nature of your business, as well as the individuals who run it.
In order to be eligible for an account, you’ll have to meet a number of requirements. For example, you may have to be at least 18 years old and have a UK address in order to participate.
- Find out who qualifies for a business account and what information you’ll need to provide your bank when making your application in the sections below’
- Opening a business bank account requires the following documents.
A Business Bank Account Application May Require You To Submit The Following Documents And Information
- A driver’s license, passport, or other government-issued photo identification
- Bank or council tax statements are acceptable forms of identification to serve as proof of residence in the UK.
- Proof of a UK business address, such as a utility bill, a rental contract, or correspondence from HMRC
- Personal and professional contact information, such as a phone number and email address (if applicable)
- Estimated annual revenue
- If you’re running a limited company, you’ll need either a registration number from Companies House or a certificate of incorporation.
- If applicable, the number of employees you have.
Sole traders may need to provide their Unique Taxpayer Reference (UTR) if they are required to do so. Anyone who has access to the account or owns stock in the business could be required to provide proof of identity and address by your bank (normally at least 25 percent ).
Proof of your company’s existence may also be requested. Consider displaying the fact that your company has a website or social media presence or is registered with an official industry body. Inquire with the service provider you choose about the types of proof they accept.
Is It Possible For Me To Open A Bank Account For My Business?
An individual or limited liability partnership or a limited company that is registered with Companies House must open a business bank account in order to do so.
Your provider may have additional requirements, such as a minimum or maximum turnover limit or a ban on certain industries. Before submitting an application, make sure you’re eligible.
Sole proprietors may be able to take advantage of special accounts offered by some service providers. When looking for a bank account, it helps to understand how your company operates in order to narrow down your options. Make the switch from a sole proprietorship to a limited liability company in your bank accounts
What If I Want To Switch Business Banks?
If you’re dissatisfied with the level of service you’re receiving from your current business bank, you may want to look for another option.
Alternatively, you might have found a better deal elsewhere altogether. In other cases, your business circumstances might have changed, meaning you have different requirements for your business bank account.
With Nerd Wallet, it doesn’t matter if you’re looking to open a new business account or if you’ve already got one. As an additional option, the Current Account Switch Service might be an option. It’s free to use and guarantees a simple switch between providers.
Businesses that employ fewer than 50 people with an annual turnover of less than £6.5 million are eligible to use the service. You’ll need to sign up with both your current bank and the one you’d like to switch to.
A Business Bank Account Can Be Opened In As Little As A Day
The time it takes to open a bank account for your business depends on a variety of factors. You may face a delay in the application process if the information and documents you submit are incorrect or incomplete. It may take longer to open your account if your business structure is complex.
When setting up a business bank account, it can take anywhere from a matter of minutes to a few days or even weeks, depending on the bank you choose and your personal circumstances.
As a result, businesses should account for the possibility that the process of opening a new account will take longer than expected in their business plans.
There is a chance that digital banks will allow you to open an account the same day you apply. There are a number of factors that can affect this, including how quickly the provider can process your documents and whether or not the provider needs additional information from you.
You’ll learn everything you need to know about opening a bank account in the UK, including how to fix account drops, from the blog listed above.