What are the best free business bank accounts 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?
• Are you able to manage expenses through them?

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…

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

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.