When operating as a LTD company, a business bank account is strongly advised. Whether you’re at the start of your business journey, or have been trading for a while, this guide to the best business bank accounts for LTD companies will help you find a banking service that can save you both time and money, all tailored towards a LTD company setup.
In This Article You’ll Discover
Best LTD Company Account For Low Fees
Pros
Cons
Starling is our overall top pick for day-to-day business banking. There are no monthly account fees, and electronic transfers into and out of your account are free. It’s also free to withdraw money from an ATM, and it’ll work with accounting software like Xero, Quickbooks, and Sage. They are an app-only bank, which means they don’t have a physical presence and charge a high fee to deposit cash through their post office service. They are an excellent option if you primarily send and receive funds electronically.
Best LTD Company Account For New Businesses
Pros
Cons
Tide is certainly worth considering if you are starting a new LTD company. They will walk you through the process of forming an LTD company, and their approval times are among the fastest in the industry. Their rates aren’t the cheapest, and they don’t have a high street presence. If you want to pay in cash or cheque, you can do so at the Post Office, but there will be a fee.
Best LTD Company Account For Tracking Finances
Pros
Cons
If you’re familiar with Monzo’s personal account offering, you’ll know that they excel in organising and categorising you income and spending. They offer a free business account, but the features are somewhat limited. Their Pro account costs £5 per month and with that you get a heap of great features, including 6 months free Xero accounting software, which would cost upwards of £12 per month on its own. Bank to bank transfers are free, but there is a £300 daily cash deposit limit. You can only withdraw £300 in cash for free every 30 days.
Best High Street Bank for LTD Companies
Pros
Cons
If you are LTD company looking for a business bank that offers a high street presence, then the Virgin Money M account is a superb choice. It’s specifically aimed at new companies looking for a cost effective solution. With no monthly account fees and no transaction and ATM charges, the M account is low cost, but big on features. They also offer a useful in app cheque scanning feature which can be a real time saver. Paying in and withdrawing cash can be costly though and they do have manual credit and debit charges. Your turnover must also be below £1million.
Do I Need a Bank Account When Trading as a LTD Company?
If you are actively trading as a LTD company, although not a legal requirement, it’s strongly advised. Having all your business transactions in one place is a real timesaver when it comes to accounting and tax calculations.
If you haven’t setup your LTD company yet (check out my guide on how to setup a LTD company for free), getting your bank account will be one of your first tasks, once you are registered. It is fairly quick and easy to do, once you have all the correct information together.
Alternatively you can use a company formation agent. This makes the process much faster and easier and doesn’t cost much more. Take a look at our list of the best company formation agents in the UK, for more information.
How Do I Open a LTD Company Bank Account?
Choose Your bank account
Submit application and documents
Wait for approval
Setting up a LTD company bank account is relatively straight forward., with some simple planning you could be setup in 10 minutes
1- Choose Your Bank Account
You first need to choose the right business bank that suits your needs, look at the relevant charges that you think will apply to you as well as the services that you think you will need.
2- Submit Your Application and Documents
Once you’ve chosen the LTD company bank account that you want to open, you’ll need to submit your application. This can be done only in most cases. You’ll need a number of documents, but more on this below. If you have everything to hand, this shouldn’t take more than 15 minutes to complete.
3- Wait For Approval
Approval times are getting faster every year. It can take less than 10 minutes to get set up, but plan for 7 working days to be on the safe side.
What Documents Will I Need to Setup a LTD Company Bank Account?
Checklist
- Valid photo ID – Passport, Drivers Licence
- Proof of address – Bank statement or Utility bill
- Your business details – Company Number, registered address, VAT details and expected yearly turnover
- Unique tax reference number
Having all the correct documentation together before you apply, will make the process much quicker and easier. Make sure you have all of the following to hand so that you can streamline the process.
A passport or drivers license will be the go to option here. But a national ID card, or biometric residence permit is also usually acceptable. Make sure that your photo ID is in date, as it will not be accepted if it has expired.
You will require proof of your registered business address. this can be a utility bill, bank statement or a signed letter from a professional body (for example your accountant). Each bank’s requirements will vary, so make sure you do a quick check before to see what they accept.
The majority of business banks will want the following
- Your company number, provided when when you register your company
- Your registered business address
- VAT number (if you have one)
- Your area of business and some corresponding proof
- Your yearly turnover (or expected turnover if you aren’t trading yet
- Your UTR (Unique Tax Reference number). You’ll be able to find this from your Government Gateway account
How Long Does it Take to Open a LTD Company Business Bank Account?
This will depend on the bank you are applying for an account with. Generally the best bank accounts for LTD companies can be opened within a week. Tide prides itself on speed, claiming 53% of applicants were up and running within 10 minutes.
To be exact, 53% opened their accounts in under 10 minutes, 70% in under 60 minutes, and 81% within 48 hours.
– Tide Bank
Of course a lot will depend on the nature of your business and you submitting the correct information when applying for your bank account.
It will often be quicker opening your LTD Company bank account if you already have a personal account with the provider. However, never make this your deciding factor. always shop around and find the best deal for YOU, that suits YOUR needs.
What Charges Can You Expect With a LTD Company Bank Account?
Unlike personal banking, LTD company bank accounts incur some charges. Whilst LTD company banking costs have reduced significantly over the last 5 years (if you choose some of the newer app only banks), you may still be charged for some services that are traditionally free for personal bank accounts. Below are some of the costs that you can expect.
The monthly fee for having an operational bank account. Many of the business bank accounts that we have listed have no standing charges
The price you pay per transaction. For example transferring money in and out of your business bank account, paying standing orders or direct debits and paying in or withdrawing cash, either over the counter or at an ATM.
You will normally need to apply for an overdraft separately when you open your business bank account. There may also be an annual fee as well as interest charged on the amount you borrow.
If you try to make a payment without sufficient funds in your account you may be charged. Thankfully there are banks that don’t charge if a payment is refused.
Whilst there are plenty of virtually free business bank accounts, many will offer premium services, for example Starling offer a business toolkit, that makes for faster invoicing and tax calculations. You may not want these initially, but they can be useful time savers as your business grows and you can afford it.
Pretty much a given nowadays and we’d go as far to say it’s an essential requirement. Most business banks offer this for free, but there could be some cases where internet banking isn’t available or there is an additional charge, so always check when opening an account.
Can I Switch Bank Accounts as a LTD Company?
Yes you can switch your LTD company business bank account at any time. If the bank that you choose participates in the current account switch guarantee program, the process is very easy.
Take a look at the list of banks and building societies that participate in the scheme.
When switching with a bank that participates in the current account switch guarantee program, all payee’s direct debits and standing orders are automatically moved over for you.
Are LTD Company Business Accounts Protected By the FSCS?
A LTD company bank account is covered by the same guarantee as personal bank accounts as long as they are authorised by the FSCS. Most banks will display the FSCS logo on their website if they participate in the scheme, but if you are unsure just ask.
If the bank is authorised by the FSCS, your funds will be protected up to £85,000. This means if, for whatever reason, the bank is unable to pay out funds to you, you will get £85,000 back from the Government.
This is based on a per account basis, not per organisation, so if you have more than £85,000, it may be wise to spread your funds across multiple accounts.
Summary
Whilst it’s not a legal requirement, it’s best practice for a LTD company to have a business bank account. You can open one and have one up and running in under 10 minutes.
You’ll need valid photo ID, proof of address and your LTD company details, like UTR, company number, registered address and VAT number.
Make sure that you are aware of bank charges that are associated with running a LTD company bank account and if possible choose a bank that is authorised by the FSCS to guarantee your funds up to £85,000.
