The best business bank account for a sole trader is the one that fits how you get paid. If you invoice clients and rarely touch cash, an app-first account such as Starling, Monzo Business, Tide, Mettle or Countingup puts invoicing, tax pots and accounting connections on your phone. If you take cash or want a branch, a high street account from Barclays, HSBC, NatWest, Lloyds or Santander is usually the better fit.
Picking a bank account feels like admin you can put off. It isn't. The account you choose decides how easy your tax return is, how quickly you can see who's paid and how many evenings you lose to bookkeeping.
This guide is for UK sole traders only, and it starts with what to look for rather than a ranked list. The right account for a mobile hairdresser who takes cash isn't the right account for a freelance designer who invoices clients abroad. Work out what matters to you first, and the shortlist almost writes itself.
Do sole traders need a business account?
No. In the UK there's no legal requirement for a sole trader to have a separate business bank account. You and your business are the same legal person, so you're allowed to run it through a personal account.
I'd still open one. When business money sits in its own account, your records for HMRC are far easier to keep. You're not scrolling past supermarket shops to find which client paid what, and if HMRC ever asks a question, you've got a clean trail to show them. Digital record keeping is also becoming the norm for many sole traders under Making Tax Digital for Income Tax, so check where you stand on GOV.UK or with your accountant.
There's a second reason. Some banks don't allow business use of personal accounts in their terms and conditions. If lots of client payments run through your personal account, the bank can ask you to switch to a business account, and in some cases it can close the account. If you're not sure, read your current account terms.
What matters most
These are the features I'd look at first. Not every row matters to every sole trader, so pick the three that matter most to your business and judge each account against those.
| Feature | Why it matters for a sole trader |
|---|---|
| FSCS protection | Eligible deposits with a UK-licensed bank are covered by the Financial Services Compensation Scheme up to the scheme limit. E-money accounts work differently, so check how your money is protected. |
| Invoicing built in | You can create and send invoices from the same app the money lands in, and see at a glance who's paid and who hasn't. |
| Tax pots | Setting aside a share of each payment for your Self Assessment bill means January doesn't come as a shock. |
| Accounting software connection | A live feed to Xero, QuickBooks, FreeAgent or Sage saves hours of typing and makes your accountant's job quicker. |
| Cash deposits | If customers pay in cash, you need somewhere to pay it in, whether that's a branch or the Post Office. |
| Phone support | When a payment gets stuck or your card is blocked, being able to speak to a person matters more than any feature. |
| International payments | If you have clients or suppliers abroad, check which currencies are supported and how exchange is charged. |
Accounts by the kind of sole trader you are
Most sole traders fall into one of two camps. Either your money arrives digitally and you want everything in an app, or you handle cash and value a branch. Here's how the well-known options line up. I've stuck to what each provider is known for, so check the current features and charges on their own site before you apply.
App-first accounts for online and freelance sole traders
If most of your income arrives by bank transfer or card, an app-first account is usually the easiest life. You can often open one on your phone the same day, and invoices, receipts and tax savings all live in one place.
- Starling. A UK-licensed bank with a business account built around its app. It's known for Spaces to set money aside, built-in invoicing and connections to the main accounting packages.
- Monzo Business. Also a UK-licensed bank. It's known for tax pots that can put a slice of each payment aside automatically, plus invoicing and accounting connections on its paid plans.
- Tide. Built for small businesses and freelancers, with invoicing, expense tracking and accounting integrations. Tide offers different account types, so check how your money is protected on the one you choose.
- Mettle by NatWest. An app-based account from NatWest Group. It's known for invoicing, receipt capture and its link with FreeAgent, the accounting software NatWest owns.
- Countingup. Combines a business current account with bookkeeping in one app, so transactions are sorted into categories as you go. It suits sole traders who'd rather not run a separate accounting package.
One thing to watch: some app-based providers are e-money accounts rather than banks. Your money is safeguarded, which means it's kept apart from the company's own money, but that isn't the same as FSCS protection. Check on the provider's website whether your money is FSCS protected before you keep a large balance there.
High street banks for cash and branches
If you take cash, pay in cheques or like being able to walk into a branch, the big high street banks still earn their place. They also suit sole traders who might want an overdraft or a loan later, because you'll already have a history with them.
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- Barclays. Business accounts with app and online banking, branch access and a wide range of extras as you grow.
- HSBC UK. A familiar choice if you want branch support and international banking from the same provider.
- NatWest. Business accounts with app banking and access to NatWest's wider support for small businesses.
- Lloyds. A large UK branch network, with business accounts that include app banking and accounting connections.
- Santander. Business current accounts aimed at sole traders and small firms, with branch and online banking.
High street apps have improved a lot, so you're no longer choosing between a branch and a decent app. The usual trade-off is opening time. Expect more paperwork and a longer wait than with an app-first provider.
If you can't decide
Plenty of sole traders run two accounts: an app-first one for everyday invoicing and a high street one for cash or as a backup. That's a sensible setup if a frozen account would stop you trading. If you want to compare more options side by side, my guide to online business banking accounts goes wider than sole traders.
Make a business bank account or money app? See how to get it featured on this list.
How to open one
- Use the table above to decide what matters most, then shortlist two accounts.
- Check eligibility. Most providers want you to be a UK resident and over 18, and some don't accept every type of business.
- Gather your details: photo ID, proof of address, your trading name if you use one, and a rough idea of what you sell and expect to earn.
- Apply in the app or online. App-first providers usually ask for a selfie and a photo of your ID. My walkthrough on how to open a business bank account online covers what to expect.
- Connect your accounting software and switch on any tax pot or savings feature straight away, before the first payment lands.
- Put the new bank details on your invoice template and tell regular clients. While you're at it, tighten up your invoicing so you get paid on time.
- Move recurring business payments across over a few weeks, then stop using your personal account for business.
Whichever account you pick, talk to your accountant before you switch if you're mid-way through a tax year. They'll tell you what records they need and whether anything changes for your Self Assessment.
Frequently asked questions
Can a sole trader use a personal bank account for business?
Yes, it's legal in the UK. But some banks don't allow business use of personal accounts in their terms, and a separate account makes your HMRC records far easier to keep.
Is my money safe in an app-based business account?
If the provider is a UK-licensed bank, eligible deposits are covered by the FSCS up to the scheme limit. Some app-based providers are e-money accounts, where money is safeguarded instead, so check with the provider.
Do I need a business name to open a sole trader account?
No. Many sole traders trade under their own name. If you use a trading name, have it ready when you apply.
Which business account is best for taking cash?
A high street bank with branches is usually easiest. Many app-first accounts let you pay cash in at the Post Office, so check whether there's a charge.
