Best Bank Accounts for Small Businesses 2021 (Updated Mar 2022)

Leona Mondsee
Chief Financial Officer, rebank
4
minutes

Don’t know what the best business bank account for startups is? Don’t worry, we’ve got you.

Startup founders have a never-ending list of tasks and deciding which bank account to open often gets overlooked. In the first few months, you need an account that lets you spend with a corporate card or via bank transfer plus allow easy record-keeping for financial reporting. What about accounts with advanced features? Are they worth it early on? These additional tools can help you scale, e.g. invoice management, payroll management.

We’ve ranked the most popular business bank accounts in the UK so you can compare the best options and find the account that works for your needs.

Let's start with the basics

A business bank account works in a similar way to your personal bank account but is used for handling business income and expenditure (i.e. ins and outs). You should keep personal and business funds separate as soon as you’re able to. It not only saves your accountant time but also gives you a clearer picture of how your startup’s money is being used.

There are business bank accounts for every kind of budget and operational complexity. Simple solutions let you send and receive money in various ways, and more complex offerings could include tools like invoice management, payroll management, accounting and tax return management.

Whether you can open a business bank account online is worth considering too if you want to avoid fiddly paperwork and delays.

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Which business bank account fits your profile?

The best business bank account for your small business is one that fits your profile. We’ve created four examples of small business types below, all based on hundreds of hours of startup interviews, and made suggestions for each one.

For the remote-first startup

"You have an even mix of local and international payments"

Revolut Business or Starling Bank are worth considering here. They both publish their fees online so it’s easy to compare the two. Before going ahead, check that the currencies your contractors need are supported.

For the aspiring SaaS startup

"You have an even mix of local and international payments and your customers pay you in multiple currencies so you need a multi-currency account"

Incumbents are terrible when it comes to international payments so that rules them out. Revolut Business is worth considering. This is rebank’s focus too - most of our customers fit this description.

For the security-conscious startup

"You mostly make local payments (e.g. salaries), with some card payments but there’s not much account activity beyond that."

You don’t care about the latest trendy fintech app. You’re happier knowing that your money is safe and won’t disappear when that fintech runs out of money.

We’d recommend going with an incumbent like HSBC, Barclays, Santander, or Lloyds. Yes, they can be more expensive than newer banks but only if there is a lot of activity in the account.

For the creative sole-trader

"You make a few card payments every month and need somewhere to receive customer payments."

Banking and finances are boring. The best business bank account for sole traders is one where you just need some way to accept customer payments and easily pay for things. Incumbents like HSBC, Barclays, Santander, or Lloyds will definitely work but Mettle or Tide are worth considering if they let you accept customer payments.

Not all banks are set up to accept customer payments from Stripe, Sum Up, Paypal Here, etc. so it’s worth checking with the bank first!

How does rebank fit in?

Rebank will work with any of your existing banks, allowing you to make global payments at the lowest possible exchange rate.

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Cost comparison table

We've compared costs across banks by creating an example company that spends £5,000 per month in local bank transfers and international transfers (e.g. payroll, bill payments). Check out the results in the table below:


startup bank comparison
Business bank comparison table. An unbiased look at the best business banks available to small business and startups.

All banks can be integrated into accounting tools like Xero or Quickbooks.

What are the key takeaways from the small print in the contracts?

  • International startups: exchange rate fees are not displayed by banks upfront so expect to pay extra!
  • Many players offer a “free business banking period”; beware once this period expires, you’ll have to pay a monthly fee
  • Transaction fees are very confusing to understand so check the fees and rates section before you make a decision.
  • Minimum and maximum balances vary too; read the T&Cs section carefully

What requirements are there to open a business bank account?

Most of the banks we spoke with have an electronic application process. This means you can securely upload documents. You’ll have to provide some information:

  • Proof of identity (and proof of address) for company directors
  • Ad-hoc documents depending on the institution. This could be articles of incorporation or sales invoices to prove that you’re an active company

What are the time frames to open an account?

Due to recent global events, the timeframes to open a small business bank account have changed significantly. It can take up to 12 weeks to open an account with an incumbent bank (HSBC, Barclays, Lloyds, Santander). Newer banks may take as little as 48 hours though!

The best bank accounts are not necessarily the best banking platforms. Know what you're getting before you commit.

Leona Mondsee
Chief Financial Officer, rebank

Your banks won't solve all your banking problems.

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