How to find and open an online business bank account

When looking for a business bank account, you'll want to consider your business needs and factors like fees, overdraft facilities, interest rates and customer support. Once you have shortlisted options, you’ll need to check if your business is eligible, as requirements vary and often by the size of your business.

• What is an online business bank account?
• What features should I look for in a business bank account?
• What do I need to watch out for?
• How to open a business bank account online?

What is an online business bank account?

An online business bank account is a financial account tailored for businesses. It offers digital access and management via a website or mobile app. These accounts are available from traditional high-street banks and online-only providers.

• Traditional Banks: These are established high-street banks like Lloyds, Barclays, and Santander. These also offer enhanced online features and apps, reducing the need for branch visits and saving time and money.
• Online-Only Banks: Providers like Starling Bank, sometimes referred to as challenger banks, and banks like Tide operate entirely online, with no physical branches. They often focus on simplicity and tech and are cheaper than their traditional counterparts.

Both options offer core banking services like debit cards, overdrafts, and business credit cards. But online-only banks typically rely on live chat or app-based customer support, which might not suit everyone, especially if you prefer to deal with a dedicated account manager or call customer support.

What features should I look for in a business bank account?

Many online business bank accounts offer features designed to save time and improve efficiency. These can include:

• Software integrations: Seamless connections with tools like QuickBooks, Xero, and Sage simplify bookkeeping and reduce errors.
• Invoice management: Banks like Tide let you generate and track invoices directly from their app and alert you when payments are made.
• Money Pots: Some banks allow you to create separate "pots" for expenses like taxes, automatically allocating funds as payments are received.
• Overdraft: Businesses can be offered overdraft, but this will likely increase the application requirements and checks. Factors like trading history, turnover, profitability and asset base will be considered. However, this can be useful for some businesses.
• Instant Alert: Most online bank accounts have real-time transaction notifications. This means you can monitor cash flow more easily and know when money goes out. It's also a way to track suspicious activity on your business account.

Other handy features include monthly comparisons of expenses and money received, tagging and categorising expenses, and photographing receipts directly in your banking app. Of course, what you factor in will depend on your industry, requirements and the size of your business.

What do I need to watch out for?

With so many options available, narrowing down your choice should not just be about the features. There are factors to watch out for. Some of these include: 

• Fees: Monthly fees vary widely, so ensure you get good value for the features provided. Depending on the nature of your business, other fees, such as foreign currency charges, overdraft charges, and more, will also likely apply.
• Flexibility: Choose an account that meets your immediate needs, with the option to upgrade later as your business grows. You may also want to consider banking with a provider that offers business loans and other credit features like overdrafts and credit cards that may help your business grow.
• Security: Security has become increasingly important, with many UK businesses falling victim to scams such as Authorised Push Payment (APP) scams [Link to guide when live]. Additionally, before applying, you should check with the bank to see if you are covered under the Financial Services Compensation Scheme and assess risks before proceeding.

How to open a business bank account online?

Whether starting a new business or switching bank accounts, opening a business account online is relatively straightforward. Here are a few steps and options to consider:

• Compare options: You can use comparison sites, like MustCompare, to compare bank accounts for small businesses or medium-sized enterprises; this will help you quickly evaluate fees, features, and customer reviews. You may also want to seek advice from a professional financial advisor, especially if you have a large or complex business.
• Prepare your documents: Depending on the provider and the type of bank account you want, you’ll need details about your business. This can be business profit, turnover, company registration number and personal identification for yourself and any other directors.
• Submit your application: Most online applications often involve uploading documents and verifying your identity via a smartphone or webcam. Some banks, like Monzo and Starling, advertise setup times as short as 15 minutes.
• Use the switch service: The Current Account Switch Service is available to consumers, small businesses, charities and trusts. It makes switching current accounts simple and stress-free, allowing you to choose a switch date that suits you.

Final thoughts

Applying for a business bank account is relatively straightforward, depending on your business's size and needs. When comparing accounts, you’ll want to look at features, fees, and current and future needs.

Whichever route you choose, online business banking can save time, improve cash flow management, and make your financial operations more efficient—empowering your business to thrive in a fast-paced digital world. So, it’s worth taking your time to weigh available options and types of accounts.