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What are the best free business bank accounts for young entrepreneurs?

Finances can be daunting. Take the stress away with our simple guide to banking for young entrepreneurs.

What do I need to think about when picking a business bank account?

The UK has over 400 banks and 45 building societies. It’s therefore understandable if you’re a little unsure which one will be the best for you as a young entrepreneur.

Whilst many of the banks will offer the same core features, there are lots of intricate differences from fees and charges to mobile banking services.

When choosing the best business bank account you’ll need to factor in the following considerations:

  • What kind of fees and charges can you afford?
  • How many transactions are you likely to be making per month?
  • Are you likely to be making overseas transactions?
  • Will you need to pay in cash or cheques?
  • Do you need access to credit – such as an overdraft?
  • Would you benefit from an account manager or in-branch support?
  • How do they score for customer service?

Who are the best providers of startup bank accounts?

You’ll already be familiar with the big high street banks – Lloyds TSB, Barclays, HSBC and Natwest – all of whom offer their own business banking services.

More recently, mobile business account providers, such as Monzo, Tide, Starling and ANNA, have emerged on the scene. One of the main differences is these providers do not have branches. This is compensated instead by offering comprehensive mobile app services – packed with a multitude of useful features negating the need for in-branch services. These are often popular with startup businesses. 

Whilst you may be drawn to digital banking, there are some drawbacks. Paying in cash or cheques can be an issue, as one example. Some people too are wary about the safety of their funds with a less-established account provider. However, all of the accounts featured in this article are either FCA regulated or have FSCS protection.   

Let’s look at the main high street branches first…

Bank

Monthly fees

Payment fees

Key features

Lloyds Bank – Business Current Account

£7

Free

  • 12 months’ free day-to-day business banking for new businesses.
  • Dedicated support from UK-based business management team.
  • Extensive online resources and guidance for running your business.
  • Mobile business banking app. 

HSBC Start-Up Business Account

Free (first 18 months)

Free

  • Free banking for first 18 months
  • Free Visa business debit card
  • Mobile business banking app
  • Integration with accounting software including Xero, Quickbooks and Sage.
  • Voted best bank for small businesses by Euromoney in 2019.

Barclays Start-Up Business Account

Free (first 12 months)

Free

  • UK-based Business Direct team on hand to support you. 
  • Comprehensive range of online support and guidance. 
  • Online banking tools and mobile app. 
  • Accredited International Team and High Growth & Entrepreneur experts.

Natwest Start-Up Business Account

Free (first 18 months)

Free

  • Free accounting software with FreeAgent.
  • Dedicated ‘Business Builder’ online community with free resources plus local networking events. 
  • Apply for Business Credit Card with no fee for the first month. 

Metro Bank Business Account

Free for balances over £5,000.

50 free transfers per month.

  • Access to a Local Business Manager. 
  • High scores across Independent Service Quality Survey, including 1st for online and mobile services and service in branches. 

Now, let’s look at the top mobile business accounts…

Bank

Monthly fees

Payment fees

Key features

Tide Business

Free

20p

  • Quick and easy to set up.
  • Scheduled payments.
  • Integration with accounting software.
  • Set up sub-accounts so you can ringfence money for wages, expenses or bills.
  • Plus and Premium options with expanded features.

Get £50 on us when you use the code INFORMI. 

ANNA Money

Free

2 free transfers per month.

  • Less than 10 minutes to set up.
  • Ideal for freelancers and creatives.
  • Invoice management functionality.
  • Expense management automation and accounting software integration.
  • 1% cashback on purchases.
  • FS Tech Award Winner for Customer Experience.

Starling Bank

Free

Free

  • Different account options for limited companies and sole traders.
  • 24/7 customer service support.
  • Integration with Quickbooks, Xero and FreeAgent.
  • Deposit cash and cheques at your Post Office.

Monzo Business

Free

Free

  • Fee-free spending abroad.
  • Spending and budget categorisation.
  • Pots to separate money. 
  • Add receipts to payments on the go. 

Revolut Business

Free

5 free transfers per month. 

  • Freelancer and company options available. 
  • Pay abroad with 150 local currencies, and hold and exchange with 28. 
  • Two free additional account members.

What is the best type of account for a young entrepreneur?

This depends on how you plan to use your business bank account and the considerations that are most important to you:

  • Low cost and quick to setup 
    ANNA and Tide are free business bank accounts, you can sign up in minutes, and are great for saving time on admin with various excellent app features (invoicing and automated tax calculations). Although they’re not officially a ‘bank’, both are FCA regulated and are completely safe – as they don’t use customer funds to invest.
  • Award winners
    Starling Bank has established itself as one of the UK’s main business bank providers with over 200,000 business customers. They’re the winner of the Best British Bank in 2018, 2019 and 2020 in the British Bank Awards. Their accounts are also FSCS-protected meaning your funds are covered up to £85,000.
  • Overdraft providers
    If you’re looking for an overdraft facility, the High Street banks are usually better placed to support you. However, getting access to credit can be difficult when you’re young and have minimal business experience. It’s wise to control your spending when starting out and you don’t want to rack up debt.
  • Customer service and support
    Pretty much all the banks offer some kind of account management services for their business customers. This can be really useful for young entrepreneurs who need a bit more finance and general business guidance. However, some banks only offer account management if you’re signed up to their premium services.
  • Mobile and online banking
    Picking a business account that offers an extensive range of mobile and online banking services can save you money elsewhere. Many account providers offer services that will help to streamline your accounting and bookkeeping such as auto-expense categorisation and receipt capture. Budgeting tools are also available. It’s possible you’ll need to upgrade your account in order to access the full range of services, but this could still be cost-effective if it means you have more time and budget to spend on other things.  
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