If you are a limited company contractor, one of the first things you need to do is open a dedicated business bank account. We look at the steps you need to take complete the process.
Unlike sole trading, where your personal and business income are treated as one, as a limited company director your personal and business finances are kept completely separate.
As a limited company is a distinct legal entity, you must not use your personal bank account for any of your company’s affairs.
Choosing a business account
When choosing a bank account, there are a number of things you should consider:
1) Your personal bankers may not necessarily provide the most competitive business account offerings (but there is also a convenience factor of using the same provider).
3) Even if interest rates are not currently worth comparing, many banks offer 2 years free business banking, or at least very low transaction charges. Make sure you also find out what ongoing monthly charges apply once any free banking period expires.
The CashPlus business account is very popular with our visitors, as you can set up an account in minutes (literally), which means you can supply your client / agency with sort-code and account details rapidly if needs be.
Read more in our guide to choosing a contractor company bank account.
Opening your account
Having informed your chosen bank that you want to do business with them, you will typically need to meet up with a ‘small business banker’.
Assuming you have a UK-registered company, you will need to take along various bits of paperwork, such as:
1) Certificate of incorporation – with your company name and number.
2) Passport and/or Drivers licence to prove your own identity.
3) Recent utility bills and personal bank statements (if you don’t already have a personal account there).
In theory, you’d expect to have a bank account opened within 7-10 days at most (a few minutes using one of the ‘new wave’ of banks – such as CashPlus), although many contractors may have experienced less than impressive service from some high street names.
If you haven’t received confirmation of your new account details in this time, chase up your contact in the business banking section.