Sole Trader Bank Accounts: what you need to know

What is a sole trader business account?

Simply put, a sole trader business account is a normal bank account for one-person businesses.

Most high-street banks offer a business account for their personal customers, but more and more specialist banks such as Tide, ANNA and Mettle are opening too, geared exclusively towards company owners. Sole trader business accounts operate in a similar way to regular current accounts, including debit and credit card use, online, app and telephone banking and overdraft options.

There are some differences, though. Sole trader bank accounts will have significantly lower interest rates but higher fees, with the latter even including charges for paying in cash and cheques and monthly tariffs outside of introductory offers.

What are the benefits of a sole trader bank account?

As part of signing up to a sole trader bank account, most banks and providers offer financial advice, specialist teams and access to products and accounting software that can benefit your business.

When it comes to filing returns with HMRC from your sole trader bank account, it should be an easier process compared against filing from your personal account. With a sole trader bank account or a business account, it’s much easier to identify incomings and outgoings related to your business. It’s the same for managing your cashflow — by having a separate account, you can see what you’ve paid suppliers or sub-contractors, alongside how much cash the business has at the time. Things can get confusing quickly if you keep everything going in and out of a personal account.

Things to look out for

Perks: Many high-street banks will offer joining perks to gain your attention and your business. Before you commit though, be sure to evaluate what your business needs – no two are the same, after all — as well as any charges that you may incur, such as overdraft limits and transaction charges.

Accessibility: If your business handles a lot of cash, then it will make sense to opt for a bank that offers counter services. On the flip-side, if your sole trader business handles money digitally, then a specialist outlet could be better suited. If you’re new to business, you’ll want to take advantage of banks offering access to experts, bank managers, accounting tools and other software.

In summary

So, there’s a lot to consider when you’re choosing your sole trader business account. As most high street banks offer business current accounts, you have plenty of options to explore and the chance to shop around.

The digital-first banks — such as Mettle, Anna and Starling — are not to be ignored either, with each offering very competitive rates, support, software integration and feedback. When setting up your sole trader bank account, be sure to take some time to talk to like-minded businesses and explore what your business needs in order to run efficiently.

For sole traders, finding the right bank account can be the perfect way to keep overheads down and save money. However, the type of sole trader bank account that you choose will most likely depend on your business, how it's structured and how you like to keep track of your finances.

In fact, UK sole traders and freelancers spend approximately 15 days a year accounting for various company expenses in personal bank accounts, so finding the right individual business account for you could be a very smart move.

This guide will walk you through 19 accounts to consider, alongside a need-to-know explainer about individual trader bank accounts in general. If you'd like to know more about business bank accounts for limited companies, why not read our comparison article on them instead.

Key questions answered in 60 seconds:

• What is a sole trader business account?
• What are the benefits of a sole trader bank account?
• What should I look out for?

Every care has been taken to provide accurate info on each business account provider. All facts and stats are right (according to the public websites) as of January 2020.

19 sole trader bank accounts

1. Santander Business Current Account

• £500 ATM withdrawal per day
• Online banking
• Mobile banking
• Text and email alerts
• Access through Post Office
• Overdraft facilities
• Backed by Current Account Switch Guarantee

The business current account is ideal for sole traders looking to manage their funds separately from their personal arrangements, with start-ups enjoying free everyday banking for 18 months. Santander has been awarded the Best Business Current Account Provider for the last 16 years, and customers are given flexible banking choices through digital services and access through the Post Office.

2. Lloyds Bank Business Current Account

• 18 months free business banking for start-ups and new businesses
• Dedicated support form UK-based management team
• Simple pricing
• Mobile banking
• Online banking
• Various digital financial tools
• Small business support
• Credit cards, invoice finance, hire purchase and overdrafts

Sole traders will be eligible for Lloyds Bank Business Current account through the category of business with up to £3m annual turnover, and would suit a business that primarily deals in electronic payments, cash withdrawals or deposits and cheques, as these are all free transactions using this account. New business and start-ups also benefit from 18 months of free banking from Lloyds Bank.

3. Barclays Business Current Account

• Simple price plans according to how your business operates
• Monthly loyalty rewards
• Free banking for 12 months on Barclays start-up business account
• Mobile Banking
• Online Banking
• Fee calculator
• Free cash withdrawals
• Support from Barclays specialist teams
• Barclays service guarantee

Handily, Barclays offers two simple price plans as part of its Business Current Account. You’ll choose according to how your business processes finance – the ‘Mixed Payments Plan’ is suitable for business using cash, cheques and other methods, and the ‘e-Payments Plan’ is suitable for businesses receiving only electronic payments – making it much easier to identify what sole trader business bank account you need. Elsewhere, Barclays’ monthly reward scheme helps pay back a certain amount of the bank charges, according to your history with them.

4. Cooperative Bank Business Directplus Current Account

• No charges for automate credit and cash withdrawals
• If credit balance remains over £1,000 there is no monthly service charge
• 30 months free banking for new Co-operative Bank business customers
• Wide network of branches
• Optional overdraft
• Current Account Switch Guarantee

Broadly, the Cooperative Bank covers several sole trader bank accounts that can work for individual traders, but the Business Directplus Current Account seems attractive for those looking to get a bank account that works for them. With no monthly service charge for balances over £1000 and giving customers access to a network of branches, it could be a great choice for the sole trader looking for some flexibility with a business account.

5. NatWest

• 18 months free business banking for businesses under a year old
• Dedicated start-up packages
• Online banking
• Phone and mobile banking
• Access to NatWest’s Relationship Managers to discuss future plans
• Access to accounting software FreeAgent

Natwest’s take on a sole trader business account is definitely an interesting one, with no monthly charge unless your transactions are less than £5 and, for start-ups and new businesses, 18 months of free business banking and a dedicated start-up package. With NatWest’s sole trader bank account, customers are also given free access to accounting software FreeAgent, making bookkeeping a total breeze.

6. Royal Bank of Scotland Business Account

• Access to RBS Relationship Manager
• Visa debit card
• Text and email alerts
• Access to account software FreeAgent
• Specialises in small businesses and sole trader bank accounts

By giving customers access to their finances at any time, Royal Bank of Scotland is helping sole traders and smaller businesses stay on top of their finances, with accounts accessible through mobile banking apps, telephone banking and texts or email alerts. Start-ups trading for less than a year can also benefit from Royal Bank of Scotland’s sole trader bank account, with 24 months free business banking and dedicated start-up packages.

7. Metro Bank

• Branches open 7 days a week, 8am-8pm
• 24/7 phone support
• No maintenance fee if balance stays over £5000
• Quick account opening
• Dedicated support for sole traders and new businesses
• Local Business managers in each branch
• Mobile banking
• Online banking

Often overlooked when it comes to sole trader business accounts, Metro Bank’s offering is a tempting one, with the account designed to support SMEs and sole traders. To be eligible, your business must have an annual turnover of under £2m. Additionally, the account will have no maintenance fee is the balance remains over £5000.

8. HSBC Business Account

• Free banking for 18 months if you start your business with HSBC
• HSBC ‘Best Tariff Promise’
• Annual reviews
• Access to UK-wide branches
• HSBC Business Specialists
• Current account switch service
• Cash deposits, withdrawals and enquiries at Post Office branches

If your business is new or you starting out with HSBC, you can benefit from 18 months of free day-to-day banking, while benefiting from HSBC’s network of business support tools and guidance — including HSBC's business specialists and Knowledge Centre — to encourage further growth. If your business already exists, you can still benefit from 12 months' of free business banking and, afterwards, another 12 months of mixed tariffs with zero transaction fees.

9. TSB Business Plus Account

• 25 months of free day-to-day banking
• 550 high street branches
• Current Account Switch Guarantee
• Faster payments
• Free Square Reader worth £39
• Specialist support from Enterprise Nation and Funding Options

To help encourage sole traders to open a business account, TSB is offering customers a free Square Reader (worth £39) to take payments easier on the go. Elsewhere, 25 months of free day-to-day banking is hard to beat. TSB also runs a daily text alert service to keep you in the loop on balances and payments.

10. Ulster Bank

• Visa debit card
• Dedicated account for small businesses in Northern Ireland
• Online applications
• Dedicated business support teams
• Current Account Switch Guarantee

Ideal for business owners in Northern Ireland, Ulster Bank’s sole trader account caters for businesses turning over £2m or under and is covered by the current account switch guarantee, helping customers join in under seven working days.

11. Cheapest sole trader bank account: Tide

• Zero monthly account fees
• Simple user interface on mobile banking app
• Free card use at home and abroad
• Various membership benefits
• Mobile banking app

Part of the new wave of Fintech companies providing banking options, Tide’s member-based account service is ideal for sole traders or freelancers registered with HMRC. The app is designed to reduce the amount of time spent focused on banking and finance and isn’t offered to high-risk and high-volume industries, making it a noteworthy sole trader business account.

12. Free sole trader business account: Mettle business account

• Apply for the bank account in minutes
• In-app support
• At-a-glance view of monthly trends
• Categories payments and add receipts
• No hidden costs or transaction fees
• A regulated bank by NatWest
• Perfect for sole traders with less than £50,000
• iPhone Only

Mettle is another up-and-comer on the sole trader business account scene, offering an alternative take on business finance in the form a neat, no-nonsense app. Dubbed the “Netflix of Digital Banks”, Mettle has already seen attention from Forbes, Financial Times and The Spectator, offering cash flow forecasting and showing a commitment to a new approach to banking.

13. Bank of Scotland

• Free day-to-day baking for six months after current account switch
• Start-ups an enjoy free business banking fo4 18 months
• Current account switch guarantee
• Online calculators to assess cost
• Specific support for Scottish businesses and SMEs

Aimed at supporting Scottish businesses, SMEs and sole traders with an annual turnover of up to £3m, Bank of Scotland’s business current account caters to different company sizes, by offering accounts that provide free cash withdrawals and debit payments for free, even after the free period. For start-ups opening with Bank of Scotland, there’s 18 months of free day-to-day business banking to be had, while pre-established businesses also are offered six months free banking, and a £6.50 monthly fee thereafter. Scottish businesses are supported by the Bank of Scotland’s business mentoring programme.

14. Starling Bank

• Super-fast set-up
• Integration with accountancy tools include Xero and FreeAgent
• Award-winning business account
• No monthly fees
• No fees on electronic payments, transfers or withdrawals
• Cash deposits at over 11,500 Post Offices

Another (comparatively) new kid on the block, Starling is a specialist Fintech company surging in popularity among businesses and sole traders and, unlike Tide, is a UK regulated bank. Currently, Starling Bank is aiming its services at sole traders and owners of limited companies, with a 100% mobile sign-up.

15. Monese

• Support for 12 different languages
• Mobile current account
• Free contactless card
• UK business account and a Plus personal account, managed in one app
• Free local transfers
• Cash deposits to 40,000 UK locations

Monese has a monthly fee of £9.95, making it one of the more expensive sole trader business accounts on this list, yet it's still not to be sniffed at. Supported in 12 different languages, it's extremely easy to open a Monese account — many users have full access within hours — and provide users with two different debit cards for personal and business use.

16. Bank of Ireland

• Sole trader business account application can be done online
• Digital-forward, with online banking and ‘smart payment’ options
• Overdraft facilities
• Debit card with contactless

Bank of Ireland has a long history of supporting Irish business, making it incredibly easy for sole traders to open a business account and having business advisors in every branch. There’s a quarterly maintenance fee and lower transaction fees for online payment methods.

17. CashPlus

• Account options designed specifically for small businesses
• Immediate access to bank details
• 247/ banking
• Award-winning bank account provider
• Mobile banking app

This is banking at its simplest – there’s an account fee of £69 a year (that’s £5.75 a month), and features free UK purchases and bank transfers. A sole trader bank account can be easy to set up with Cashplus, as access is given straight away after a successful application. Cashplus also offers tailored support to customers and 24/7 assistance.

18. No credit check sole trader bank account: ANNA

• Free for 3 months
• Account set-up takes less than 10 minutes
• Debit Mastercard dispatched same day
• Connect your personal account to ANNA to view your balances and account for your VAT
• ANNA calculates the amount you owe HMRC according to your tax profile

Another digital bank, ANNA is designed with traders in mind – it’s free for 3 months and £5 a month thereafter — and applications are reported not affect your credit score. ANNA also creates and sends invoices for you and chases payments if they’re not on time – making it an ideal sole trader business account.

19. Clydesdale Bank

• Bank account designed around sole traders and small business
• Optional overdraft
• Borrow up to £250,000
• Specialist support tools and guidance
• 25 months of free banking for new customers and start-ups
• Current Account Switching Guarantee

25 months of free banking takes some beating here and Clydesdale’s banking offers new customers and business start-ups various tools and guidance to help get things off the ground. The mobile app is simple to use and Clydesdale Bank offers direct support to a contact that understands your business, giving you specialist guidance.

More on business bank products

• Business bank accounts
• Start up bank accounts
• Charity bank accounts
• Best direct debit companies
• Open banking
• Best business savings accounts