How Do I Choose a Business Bank Account?

If you’re a limited company, having a separate bank account for your business isn’t just a good idea – it’s a legal requirement. But even if you’re a sole trader, keeping business transactions separate from your personal banking makes life easier when it comes to taxes, managing your bookkeeping and keeping track of your finances.

Having a business bank account can even help you look like one of those serious professional types if clients need your bank details to pay you.

If you’re not too sure how to choose the best business bank account for you, this article covers all the key things to keep in mind along the way.

Understand your business needs and growth goals

The first step in choosing a business bank account is matching it to your unique needs. For example, startups will probably focus on affordability – some banks even offer fee-free accounts for the first year. It’s worth looking for low fees and basic services if you’re just starting out.

If your business has been around for a while and is growing fast, you might put more value on advanced tools like cash management or credit options. Knowing your stage can help you skip features you don’t yet need!

Watch out for fees – they add up!

Fees are one of the biggest factors when choosing a business bank account. While personal accounts are often free, business accounts usually come with fees. Even if they seem small, they can soon add up! We explain some of the common ones below.

Monthly account fees

Many business accounts charge a monthly fee. These normally range from £5 to £20, depending on the bank and account type. Some banks waive this fee for new customers or small businesses, so it’s good to check if there are any offers.

Transaction charges

Some banks charge for transactions, which might include payments, cash withdrawals and electronic transfers. If your business makes a lot of small transactions, these fees can add up really quickly, so look for an account that either doesn’t charge per transaction or offers a large free allowance.

Foreign transactions

Do you work with international clients or suppliers? Foreign transaction fees can really vary, so check what your bank charges if you handle money from outside the UK regularly. If you operate overseas as well as in the UK, you might simply decide to open a bank account in a different country.

Check out digital features and online banking options

A good business bank account should come with plenty of digital features, as accessible online tools can really streamline your day-to-day operations. Some (but not all) high street banks have systems that can feel clunky or outdated, while newer ones tend to offer smoother, more intuitive platforms – so take a look at reviews or screenshots of their interfaces if you can.

A good reliable mobile app is also important. It will allow you to make quick transfers, monitor finances, and get notifications on the go. If you’re going to use accounting software which travels well (hello Pandle Mobile) then you might as well have a bank account which does the same.

Speaking of Pandle (which is what the boss pays us for) good accounting software will also offer integrations with your bank account too. Known as bank feeds, it means transactions in your bank account can be automatically entered into your bookkeeping records without you needing to type everything out.

Consider any extra services you might need

Some business accounts come with additional perks that can help you manage and grow your finances. Depending on the needs of your business, these might be extras worth considering.

Overdrafts and loans

Access to an overdraft, business loan or other business funding can be a lifesaver when cash flow is tight. Check whether the bank offers these options and what the rates are.

Business credit cards

Some banks provide business credit cards, which are helpful for managing business expenses. Business cards can come with rewards like cashback or discounts which are great for earning a little extra on your spending.

Foreign exchange services

If your business operates internationally, check if the bank offers competitive foreign exchange rates. Some accounts have lower fees for foreign currency transactions, which can save you a lot if you regularly work with international clients.

You may not need these services right away, but it’s good to know your bank can offer them as your business grows.

Compare high street and online banks

Once you have an idea of what you need from a business bank account, you can properly explore your options. Traditional high street banks like HSBC, Barclays and NatWest are well-established and offer a full range of services, including in-branch access.

These banks are reliable and familiar which can be a comfort, especially if you like being able to drop by a branch for in-person help. In some cases, they might also have higher fees and tend to lag a bit when it comes to digital features. If you’re looking for a tried-and-tested bank with lots of services, high street banks might be your best bet, but they might feel a little less modern compared to newer options.

On the other hand, if you prefer a more tech-forward experience, challenger banks like Monzo, Starling Bank and Tide might be more up your street. These digital-first banks often have lower fees and online features that are perfect for business owners comfortable with managing everything on their phones or laptops. However, they may lack some traditional services, like overdrafts or in-person support, so it’s good to make sure they meet all your needs.

Think about customer support – it matters!

When things don’t go as planned (and let’s face it, it can definitely happen), you’ll want decent support. If you prefer face-to-face help, a traditional high street bank with branches across the UK might be a better fit, letting you drop by in person whenever you need to.

On the other hand, digital-only banks typically offer support through online chat, phone and email, with many known for their great service. Whether you choose a high street or digital bank, going with one that has reliable customer service means you’ll be covered as your business grows and your support needs change.

Try before you buy

If you’re still unsure, consider opening a trial account if the bank offers one, or start with a fee-free account. This lets you explore the features and get comfortable before fully committing. Remember, you’re not locked in forever – if things don’t work out, you can always switch to a different account later.

Learn more about using Pandle to make business accounting easier. Create an account today and decide what to do with all the extra time you get back.