The business banking scene is changing, and there are constantly new deals and discounts to make the most of. But being the most cost-effective doesn’t automatically make a banking provider the best.
When choosing a business account for your company, don’t just go off a recommendation from a friend. There’s a wide range of banks to choose from, some more traditional, and some catered to businesses that are happier to embrace technology or prefer digital banking.
The best business current accounts in 2021, offered by high street banks and digital banks, are:
HSBC offers free banking (i.e. no monthly fee and no standard account charges on payments) for the first 18 months. After that, you need to pay £6.50 per month for 1 year before choosing a tariff, such as electronic banking. In addition, you can use HSBC’s business account if your business has a turnover of up to £10 million.
HSBC also offers free online banking options and more perks, including:
- Get spending and cash flow insights;
- Arrange in-app overdrafts.
However, you can’t make international payments with HSBC’s online banking account. Keep that in mind.
Santander is another popular high street bank, offering two options for businesses: A Business Current Account and a 1|2|3 Business Current Account.
The first option is ideal for companies opening their first business account, having traded for less than 12 months. You get an arranged overdraft (from £500 to £25,000, unsecured), and you’ll need to have a good credit history to qualify.
The account costs £5 per month for the first 18 months. After that, it costs £7,50 per month, and you have a monthly cash deposit limit of £1,000.
The second option is better if cashback is essential to you. You get cashback at a rate of up to 3pc, depending on how much you put into your account annually.
If you deposit less than £200,000, you get a 1pc turnover of up to £100 cashback per annum. If your turnover is more than £200,000, you get up to £200 cashback, and anything more than £300,000 generates £300 cashback every year.
TSB offers a Business Plus account, particularly beneficial for limited companies. In fact, sole traders, partners, and directors can all use TSB’s Business Plus account, whether they’re opening a new account or switching from another bank.
After an initial 6 months of free banking, you pay £5 per month. If your average balance within a specific month is more than £10,000, the fee will be waived.
Barclays offers a Startup Business Account that gives you free banking for one year. You’ll also be given access to the Barclays Business Direct team, which may prove invaluable if you’re starting out and have many questions.
There are specific accounts for more established businesses, too, one for businesses with a turnover of up to £400,000 per annum and one for companies earning between £400,000 and £6.5 million. Barclays also offers monthly loyalty rewards in the form of cashback from account charges, depending on your annual turnover.
Choose between two business accounts offered by NatWest: Startup and Business. If you’re over 18, living in the UK, and have a right to be self-employed, you can open either of these accounts.
Businesses that have been trading for less than a year and earn less than £1 million in profits per year should choose the Startup account. They benefit from free banking for 18 months, after which they must move onto the Standard Published Tariff.
If you have already been trading for more than a year, you’re eligible for the NatWest Business account. An extra perk for businesses earning over £2 million is that they get the exclusive services of a relationship manager.
NatWest has a mobile banking app, too, called Mettle. There’s no minimum transaction fee and no monthly fee. The app is suitable for a limited company with up to two owners or a sole trader.
With Lloyds’ Business Current Account for New Businesses, you get 12 months of free day-to-day banking, providing your turnover is less than £3 million. That is applicable whether you’re opening a new account or switching from another one. Once the free banking period ends, you need to pay a £7 monthly fee.
Larger businesses with a turnover of more than £3 million can benefit from this popular high street bank’s business accounts, as well.
7. Starling Bank
Starling Bank offers one of the better digital banking solutions for a sole trader or limited company owner. You can sign up for a Starling Bank business account with no monthly charge, and it comes with an overdraft (up to $150,000).
Additional tools are offered at an extra cost (£7/month), including email integrations, invoices, and VAT recorded on transactions. And if you pay extra, you can even have accounts in different currencies.
Starling Bank has many Post Office branches across the country, enabling you to deposit money (£3 charge per deposit) from wherever you are. Integrate your Starling Bank business account with Quickbooks, Xero, and FreeAgent.
Monzo is another popular choice for digital or online banking for business. If you’re the limited company director or a sole trader, you can open a business account with Monzo. There’s also multi-user access for limited companies, which is handy.
To apply for a Monzo business account, you need to have a personal account. If you pay £5 per month for Monzo Business Pro, you can integrate Monzo with Quickbooks, FreeAgent and Xero. Monzo Business Pro gives you access to Tax Pots and 6 months of free access to Xero.
Monzo Lite is the lower tier account option, offering streamlined features at no extra charge.
If your business travels and trades overseas, Revolut is an excellent digital banking option to consider. When you sign up for a Revolut account, you can easily spend abroad. The app has partnered with several brands, such as Deliveroo, Google Ads, Apple, and Samsung.
Revolut offers several accounts:
- The Free account;
- The Grow account, at £25 per month;
- The Scale account, at £100 per month.
There’s also the Enterprise account. It can be tailored to your business’ needs and doesn’t offer set monthly fees.
Tide lets you sync your accounts with Sage, Quickbooks, Xero, and more. Schedule advance payments, check your account balance at any time, tag expenditures with labels, and create invoices with Tide’s business offering.
Tide Business is intended for small and medium businesses. You can choose to pay £9.99 for the Plus option, which comes with a free expense card that allows up to 20 transfers per month. Alternatively, for £49,99 per month, you can choose the Cashback option, which offers all the Plus features as well as a dedicated account manager and 0.5pc cashback on your Tide card.
If you prefer, you can even stick with the free version of the Tide app, which offers minimal charges for cash transfers and business loans directly from the app. You can also deposit your cash at Post Office locations with Tide, at the cost of £1 per deposit.
Remember: Even the biggest, award-winning banks can take a break from allowing new businesses to sign up for their services from time to time. So, do your due diligence before reaching out to any bank.