Opening a business bank account is one of the first steps towards setting up a small business, or becoming a sole trader. You will need a business bank account in order to make or accept payments under your trading name. Furthermore, you will be expected by HM Revenue and Customs to separate your personal and business financial affairs – meaning that you will need a separate account for your business transactions.

Opening a business bank account

First of all, spend some time choosing a business bank. There are several important aspects to consider here, so you should think carefully before coming to a decision.

Once you have made a decision, you will need to gather some important documents and information. These include:

• Certificate of incorporation. If you are registering an account for a limited company, you will need to provide the bank with your certificate of incorporation.
• Details of the business and its activities. This will include the registered address and trading address, as well as the names of directors or partners and information regarding the work that the business will be carrying out.
• A business plan. While not all banks will require a business plan, many do. Irritatingly, some banks (Royal Bank of Scotland gets a dishonourable mention here) expect you to fill in their own standard format business plans and cashflow forecasts. See our guide on writing a business plan for more information.
• Credit history. Banks will perform credit checks when deciding whether or not to offer you a business account. While this process is generally automated, some banks will ask you to provide information yourself.
• List of signatories. You will be asked to list the people that will be allowed to operate the account. Similarly, you can stipulate that cheques can only be issued if they have been signed by more than one individual. Signatures will need to be provided for all the signatories.
• Proof of identity. This is likely to be a driver’s license or passport, along with two recent utility bills. If you are opening an account for a limited company or partnership, you will need to provide proof of identity for all of the directors or partners.

The bank will then assess the information you have provided them with, and will make a decision as to whether or not to offer you an account. You should remember that banks are not obliged to give you an account. Those with poor credit histories may therefore struggle.