When you start your own company for the first time, do you need to do your contractor banking through a company bank account? The answer here is yes you will do. Therefore, you can open a business bank account shortly after you have formed your company.
I have a first timer’s guide to contracting in the UK which gives a full overview of what to consider when you start out. I would also recommend you choose a good accountant from the outset and have a read of my contractor tips.
Your company is a legal entity in its own right, and as such, you cannot use your personal bank account to do business banking.
Open a company bank account for the first time
When you open a company bank account for the first time, your company will need to be in place. Once it is, and you have the company documents, you can then apply for a new business account.
Firstly, if you choose the bank that you currently bank with on a personal basis, the process is likely to be much more straightforward. What’s more, it will be processed much quicker in most cases when you compare this to opening a business account with a bank that you have not banked with before.
Nowadays, you can also apply online, which may be easier than trying to make and attend an appointment at the bank.
Finally, most banks will, at the outset, offer a free company bank account for the first twelve months free for business banking. Some now even offer twenty-four months free. Once your free period is up, there is normally a charge each month of around £6.
Are you looking to consider a change in your company bank?
Interest rates are and have been low for several years now. It may be wise to check a site that can compare the latest deals site, such as Moneysupermarket.com. When you make a comparison, it will allow you to see which banks offer the best deals at the current time in terms of a free company bank account and what interest rates are currently on offer. When you have this info, you can consider opening a business bank account with one of the best providers.
When you consider a company bank account, a different choice to the traditional high street banks comes in the form of Tide –a rapidly growing business bank. Since the year of launch, 1 in 12 new accounts is now with Tide.
Important to note, there are no monthly or annual fees -this is free banking.
You can open an account within 5 minutes, and you will receive:
- A UK business bank account number and sort code.
- Free contactless Mastercard.
- Mobile and internet banking.
- Tide is very online accounting friendly, and a plus point is that it works well with FreeAgent .
- If you opt to use FreeAgent then Natwest, RBS and Mettle will pay your company’s FreeAgent licence fees for the life of your company. This usually costs about £30 a month if you run FreeAgent yourself or about half of this price if your accountant runs this for you. Therefore, there is a financial saving here of at least £180 pa.
Please note, Starling Bank are now a new top choice for UK small businesses and contractors for a company bank account. They offer a great Starling bank business account and this is one of the best business bank account for contractors. However, they do not yet offer a free FreeAgent licence like the bank mentioned above.
The above gives a good overview of business banking. If you are starting up for the first time, it is much easier to open a company bank account go with the bank that you bank with personally. However, you can use one of the sites that compare deals too to see where your bank stands here.
Link to Contractor Advice UK group on