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A beginner's guide to business accounts—do you need one?

Starting a small business is a stressful experience with no one-size-fits-all guide. Managing your finances is a large part of this experience, and in most cases a major hurdle (and source of stress). When you visit the website of any high-street bank with a business bank offer, you’ll find an extended feature list, rich with functionality and a number of asterisks with terms and conditions written in extremely small font. Since when did finding the best small business bank account, or even better a free business bank account, become so difficult?

At SumUp, we believe in a simple business current account, without all the small print that makes you feel like you’re signing your small business away before it begins. This guide is designed to help you find the best business current account for your needs and manage your business's finances quickly and easily.

And for sole traders, the best business bank account may not be a bank account at all.

The SumUp Business Account is a smart alternative to banks, built for freelancers, sole traders and small businesses across the UK who are looking for a hassle-free business account with free UK transfers and a free Mastercard for business spending.

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What is business banking?

For a small business owner or a sole trader, business banking is simply separating your personal money from your small business finances. But do I need a business bank account if I'm self-employed? Great question! No you don't, as long as you’re a sole trader.

A sole trader and their business is considered one entity by HMRC and so don't require a separate business bank account. To comply with HMRC regulations, make sure you've notified them that you're self-employed and file your annual self assessment.

As your business grows and your revenue with it, you'll start to think about incorporating and becoming a limited company or a limited liability partnership. At this stage, you'll be legally required to have a separate business account.

Can I use my business account for personal transactions?

  • If you're a sole trader, you can use your personal account for business transactions, but not the other way around.

  • If you're a small business such as a limited company, then you can only use your business account for business transactions.

Sole trader business accounts: an expensive oversell?

Many brick and mortar banks offer specific accounts for sole traders. Yes, these business bank accounts are cheaper, yes they usually figure on those “best small business bank account” lists you see online. However, these accounts are limited in functionality and usually have high transactional costs associated with operations such as transfers, deposits and card withdrawals.

The real value of business banking for the self-employed and small businesses?

Starting and growing a small business takes time. When you’re self-employed, you do not have the luxury of support staff to do your admin tasks while you generate new leads and try to grow. Although you don't need a business bank account if self-employed, having one will save you time now, and in the future.

High-street banks can refuse the use of your personal account for business purposes, and may even close your account if you do. If you receive a high number of transactions into your personal account, they may request you move to a more expensive business bank account.

Besides the obvious time gains and the simplified processes, here’s a handful of other benefits you get when choosing a business account:

  • Easier HMRC interactions - as a sole trader you can manage your finances more easily, especially when it comes to expenses that you’re offsetting. A small business bank account provides all this information in one place, making it much easier to find and communicate to the tax people.

  • Managing cash flow - with a separate business bank account, you’ll always have a clear picture of your income and expenditures, without the added confusion of your personal finances and other sources of income thrown into the mix.

  • Planning for the future - managing a second account, especially a start-up business account is scary, particularly when starting a small business. Fast forward six months, your small business is doing so well that you’re now incorporating, meaning you need to have a business account. Get ahead of the game, and be prepared!

There is value in having a business bank account, whether self-employed or operating a small business. However, you don't need a business bank account. SumUp offers a business account for people who are tired of traditional banks, the fees, the small print and the constraints.

With SumUp’s business account, you get a free business account for sole traders and start-ups, with a free Mastercard that’s accepted worldwide, and allows you to make those day-to-day business payments using chip and pin, contactless, Apple Pay and Google Pay.

Discover the business account

Business current accounts: what to look out for?

Trying to find the best business account that's also the best free business account? Good luck! Each offering is so different in features and cost that you can easily find yourself in information overload.

Here’s a simple list of benefits to look out for when choosing a business account:

1. Simple sign-up

If you can open a business account online, then do it. Waiting days, or even weeks, to gain access through a brick and mortar bank can set you back, and lead to paying more in set-up costs, fees, and missing out on online-only deals.

There are a number of digital banks that offer business banking services, which are usually cheaper than their high-street counterparts, and fit some of the needs of small businesses and sole traders.

2. Make sure you get a UK account number and sort code

Now that the UK is no longer in the EU, using a European bank account can create a number of difficulties for your small business. Choosing a business account with a UK account number and sort code is a good start in avoiding these difficulties.

3. Expensive doesn’t always mean better

When you’re self-employed, keeping costs down is a smart play, focusing expenses on marketing efforts that will directly impact your growth. And let’s face it, who wants to shell out on invisible business banking costs such as transfer fees, account opening costs, card fees and withdrawal fees?

4. Choose a business account with a free card

Sole traders have expenses too. You may need to get some ink for the printer, fill up on petrol, or buy a new laptop for your business. Doing these things can be hard without a card.

SumUp offers a complementary Mastercard with your business account, so you can make all the payments you need, anywhere in the world. Plus if you need cash, the card comes with 3 free withdrawals a month.

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Meeting your needs without a bank account: freedom and functionality without the cost

As a small business or a sole trader, you need tools and partners that will empower your business and help you to grow without poking huge holes in your bottom line. We’ve set out to do just that at SumUp, and our Business Account is just one part of an ever-growing ecosystem available to you, with no upfront costs or outrageous terms and conditions.

Our Business Account is just that, and it delivers on all the features we’ve mentioned in this article:

  • Online business account with no paperwork and 100% digital

  • Fast setup, available in minutes

  • Free to open

  • No monthly fee

  • Unlimited free bank transfers UK-wide

  • Fee-free Direct Debits

  • No minimum balance

  • UK account number and sort code

  • Free contactless Mastercard (contactless, Apple Pay and Google Pay compatible) 

Another huge advantage of the SumUp Business Account is the near-instant transfer functionality. Thanks to the UK's Faster Payments scheme, once you receive a payment, it’s almost immediately available, helping you to better manage your cash flow and avoid any unpleasant surprises.

Simple sign-up providing access to more than just a business account

When you sign up for a SumUp Business Account, you’re also gaining access to an ecosystem created for small businesses.

Opening a business account with SumUp is quick and easy, and can be done from your phone or computer in under 10 minutes. No paperwork or signing on the dotted line.

Step 1: Fill in some details about your business.

Step 2: Go through a quick ID verification process.

Step 3: Use your account right away to top up make transfers.

Step 4: Pay with Apple Pay or Google Pay while your card is on the way.

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A free business account for small businesses across the UK

We’re proud of what we’ve built at SumUp, from payment terminals that have changed the card payments landscape for small businesses across the UK, Europe and the US, to an online store builder that provides sole traders all the tools to start advertising their products and services online.

But what we’re really proud of is the cost. Our offering is accessible to all small businesses, with no barriers to entry, no sign-up fees, no monthly subscription fees and no hidden charges. Simply buy a card reader and pay a small transactional fee per operation. Create an online store and only pay us if your client pays you through the store.

For our business current account, we don't charge anything where it matters. You have free payments, free transfers, a free card, no minimum balance and no monthly fees. We throw in 3 free monthly ATM withdrawals and only charge a small fee if you withdraw more than three times, or decide to withdraw some cash abroad.

Sign up now for a simple way to manage your business’ money from day one, and empower yourself to break free from the usual constraints linked to money management. 

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SumUp Team