Company bank account and contractor banking

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When researching the best business bank account for contractors, what should you consider for a UK business bank account? When you start your own company for the first time, there are various tasks to complete. One of these is to find a bank account for independent contractor purposes. Therefore, you must open an independent contractor bank account for your UK limited company, besides finding your first UK contracting role through a recruitment agency or directly with a client. All contractors must open a company bank account for their business and contractor banking. Therefore, when starting a new business, you can look for a start-up business bank account (UK) and find the best deal. However, what is the best business bank account for UK contractors and who offers the best business banking (UK)?

When it comes to banking for independent contractors, one key point to remember is that a limited company is a distinct legal entity from an individual. This means that a separate contractor limited company bank account is a necessity. Once you’ve successfully formed and registered your new company, you can proceed to apply for a business bank account. Upon opening your contractor business account, your company becomes a business customer, allowing you to access its range of banking services.

Therefore, who offers the best business bank account for contractors and who provides the best free business banking (UK)? Also, when you begin running your own company, who has the best free UK business bank account and the best free online business bank account (UK)? Furthermore, what else should we consider for the best limited company bank account? When considering where to find the best business bank account (UK), we can start by researching the best business current accounts (UK) for contractors.

Initial thoughts on UK contractor banking 

What if you operate as a sole trader?

Operating as a sole trader means you are not a separate legal entity from your business. Therefore, having a different business bank account is not a legal requirement. As a result, you can use your personal bank account. However, it’s crucial to keep accurate business records. This responsibility puts you in control of your business’s financial health. On the other hand, you may choose to have a separate small business bank account (UK) for your trade. Indeed, a separate account will likely be the case if lots of transactions are going through the business.

Does a limited company need a business bank account? 

Let’s now consider whether a limited company needs a business bank account. As mentioned earlier, your company is a separate legal entity from you as an individual. Therefore, do independent contractors need a business bank account? Your limited company is a separate legal entity; thus, it’ll require a separate bank account as a contractor.

It’s good to know that when you investigate business bank accounts for contractors, there are many choices out there. Therefore, let’s consider what to look for in a business bank account. As part of your research, it’s a good idea to look for a bank which offers business banking for contractors with free access. Many will offer free business banking initially, but which are the best banks for independent contractor purposes? In addition, which is the best high street business bank account in the UK?

When we investigate further, we’ll find some UK banks are better for your contractor account than others. However, which is the best business bank (UK) and offers the best free business bank account ((UK) for limited company contractors? To sum up, we’ll review these areas in this guide and learn how to look for the best business bank account for contractors.

You’re a regular employee if you work through an umbrella company as one of their PAYE employees. Therefore, you don’t have to open a ltd company bank account.

UK contracting guides

Besides considering your contractor banking and finding the best bank for contractors, we have a first-timer’s guide to contracting in the UK. This guide gives a complete overview of what to consider for your contracting business. This is valuable information for you when starting up for the first time. What’s more, we recommend as a limited company contractor, you choose a good contractor accountant from the outset. In addition, please read our guide, which covers tax tips for UK contractors. Another helpful guide worth reading explains what contractor business expenses you can claim.

Do you need contractor insurance?

If you’re setting up as a contractor for the first time, besides obtaining a UK business bank account, you should consider your independent contractor insurance requirements. Your contract will state which insurance to get in place for your work. This will likely include Professional Indemnity insurance, but you may require other contractor insurance.

Through our contractor website, you can get contractor business insurance. When you apply, you can use Code CAUK10 at the checkout to receive an excellent 10% contractor discount. Our partner, Qdos, offers contractor policies and is one of the best contractor insurance providers in the UK.

Setting up a company bank account for the first time 

Limited company contractor banking general advice

When setting up a limited company bank account for the first time as a contractor, your limited company needs to be incorporated. Once it is, you’ll have the company documents. As a result, you can investigate the current business banking offers and search for the best UK business bank account for independent contractors. You can set up a company bank account once you decide on a bank.

When you look for a bank, independent contractor options include choosing the bank you currently bank with on a personal basis to set up your new contractor business bank account. The process when you open a company bank account will likely be much quicker and more straightforward if you do. This is when we compare it to opening a business bank account (UK) for your company with a bank you haven’t used before. If you’re an IT or finance contractor or work in another industry, there’s a good guide online on how to open a UK business bank account from a UK government department. You can also view the HMRC community forums for questions from visitors on business banking.

Bank account for independent contractor

Nowadays, you can apply online when you find the best business account for independent contractors. Therefore, when you open a business bank account for your limited company, this process will save time. In addition, it’ll be easier than trying to make and attend an appointment at the bank.

Most banks will offer a free company bank account for your UK contractor company’s business banking at the outset. A free business bank account (UK) usually applies for the first twelve months. However, some banks now offer twenty-four months of free business banking. Once your free period is up, there are usually monthly fees of around £7.

As time passes, you’ll expect your business bank account to help you grow your business. Therefore, you’ll ideally require a contractor banking business account which operates effectively and doesn’t have hidden fees.

We recommend that you open a business current account and a business savings account. The savings account can be used to save company taxes, including Corporation Tax, separate from your `normal’ company funds.

What information is required to open a business bank account for a limited company?

When you’ve found the best business banking services, you can open a contractor business bank account for your limited company. The bank will require you to provide various information as part of this process. Typically, as part of your limited company banking application, you must supply the following details:

  • The name and address of all company directors.
  • Any previous names and addresses (if you’ve lived at your current address for less than three years).
  • Your date of birth. Many banks will not let you open an account until you are 18 or older.
  • Your nationality and residency status. If you’re a UK resident, the process is straightforward. However, if you’re a non-UK resident looking to open a business bank account for your new venture.
  • The details of your personal current account (the sort code and account number).
  • Your limited company details, including the company registration number and registered office address. However, you should have set up your company before you apply for an independent contractor business bank account.
  • Photo ID such as passport, driving licence, etc.
  • Proof of the applicant’s (director) home address.
  • Your company’s paperwork, such as your Certificate of Incorporation. They may also require a copy of an HMRC letter (HMRC will write to you shortly after setting up your company) or a letter from your accountant. Please check with the bank you’re applying to for their ID requirements.

Contractor banking formal checks & turnaround time

Your choice of bank will carry out formal checks as part of your application to set up a Ltd company bank account. These checks with Companies House are to verify that the company is genuine. In addition, they’ll check who the directors and shareholders are. Once the bank is happy and has completed its process, it will contact you to say your new business bank account (UK) is now open.

Some banks will turn this around within a few working days when setting up a business bank account. However, opening a limited company bank account can sometimes take a couple of weeks or even longer.

Further thoughts on a UK business bank account 

Consider a change to your contractor banking

It may be time to look for a change in your contractor limited company bank account. As part of this change in your banking arrangements, you may seek the best UK business bank account. It’s worth noting interest rates were very low for several years up until recently. Therefore, it may be wise for UK contractors to check online for the best new business bank accounts and look for the best interest rates. When you do this, you could search for ` business bank account best’ or `best business banking services UK’ and see what comes up. Alternatively, you can compare business bank accounts and look at the latest deals on comparison sites. Therefore, when you look to compare the best business accounts (UK) and best online business banking, you could visit websites such as:

When you compare business banking (UK) between the top business bank accounts, you can see which banks currently offer the best deals for a free company bank account. Furthermore, a business bank account comparison (UK) will show what interest rates are currently on offer. With this information, you may consider applying for a business bank account with a bank offering a better deal.

What about customer queries & switching services?

Another consideration is how ABC Bank plc deals with customer queries. This is important in terms of waiting times and satisfactory resolution. Having a UK team rather than a call centre in a foreign country is helpful and much better. Furthermore, you could read their terms and conditions to see what to expect from your new independent contractor banking service.

In addition, like personal accounts, some banks offer an account switch service for limited company bank accounts. When you switch, you should open a contractor business account with the new bank. As part of your application, you can select an option to show you’re switching accounts. Once the process starts, the bank transfers over payment commitments such as direct debits.

FreeAgent digital online software

Many contractors and small business owners use a digital platform called FreeAgent. This option will help a company to maintain its bookkeeping records online. Nowadays, most banks are compatible with many of the digital platforms available. The digital software will link to your company bank account and automatically import bank transactions.

Most popular and well-known online software packages cost about £30 a month if you run them yourself. Sometimes, the monthly cost can be half of this if your accountant runs them for you and has a deal with the provider.

If you opt to use FreeAgent, the banks Natwest, RBS and Mettle will pay your company’s FreeAgent licence fees for the duration of your company’s existence. Therefore, a financial saving here is at least £180 per annum when you open a limited company bank account with one of these banks.

If you use a digital platform to keep your company’s accounting records, it’ll link to your company bank account. Therefore, you could ask the bank for a debit card for your new contractor business account if the bank doesn’t automatically provide this. If you use your business debit card to pay more of the company’s business expenses, such payments will automatically feed through to your digital software. Using a business card will make recording these transactions slightly easier than paying for such business expenses through your own personal card or cash.

More thoughts on contractor banking

New banks on the scene

In 2024, there are the usual high-street banks to consider. However, new online banks are now available in this digital world. When individuals look for the best bank for independent contractors, many will look to these new types of banks.

Starling Bank plc is a new entrant onto the scene; however, is this the best bank account for independent contractors? A Starling business bank account is now a new top choice for UK small businesses and contractors for a company bank account. According to many, they’re the best bank account for contractors. They offer an excellent Starling business account and good contractor banking services. Basically, it’s one of the better banks that provide business banking for contractors and small businesses. Other new banks on the scene include Revolut, Monzo, Tide, Chase, and others.

Although Starling is one of the best bank accounts for independent contractors, it doesn’t yet offer a free FreeAgent licence like the banks mentioned above. However, the FreeAgent online software will integrate with Starling like most other banks.

What are other choices for contractors for the best business bank accounts? As mentioned, you can search online for the best deals, and you should remember that Natwest, RBS, and Mettle pay the FreeAgent licence fee.

Financial Services Compensation Scheme

All banks in the UK must offer the Financial Services Compensation Scheme. If the financial institution concerned becomes insolvent, this scheme protects the first £85,000 of any savings an account holder owns.

The Financial Conduct Authority regulates all financial institutions in the UK, including banks. This regulation means the financial institution must adhere to certain standards of practice.

Final thoughts

For contractor banking, the above gives a good overview of finding a good business bank account. We show where to look when you search for the best business bank account for contractors. If you’re starting up UK contracting for the first time, it’s much easier to open a company bank account and go with the bank you bank with personally. However, you could use a site which compares the current deals for business bank account offers to see where your bank stands. If you go with one of the banks partnering with FreeAgent for your UK business bank account, there’s a good saving to be made here. Indeed, this final option is a prevalent choice.

Link to Contractor Advice UK group on


Published On: April 6th, 2024 / Categories: First timer guide, Other Guides, Starting Up Your Own Company /

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One Comment

  1. Free limited company January 11, 2022 at 7:35 pm - Reply

    Opening a company account with a bank also has other additional perks. For example, you can usually obtain free banking for at least a year as a new business. Also some banks even offer new clients special deals on accounting software to use in their businesses. Lastly, as regards this point, it may be easier for you to obtain a business overdraft or loan if you have a company bank account.

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