5 best business accounts for the self-employed

There is no such thing as a perfect business bank account. But somewhere, there is a business account just right – or almost perfect – for your freelance situation.

Choosing a bank account as a self-employed individual is a precarious business, let alone choosing any bank account. Fortunately, UK-based sole traders now have a wide choice of online accounts with easy sign-ups and low costs to suit any budget.

We have tested quite a few business accounts suitable for sole traders and know the ins and outs of each. Not all are full-fledged bank accounts – most are actually e-money accounts with a connected debit card that (usually) works just as well as traditional bank accounts.

There are, however, limitations associated with any solution – which really depend on your particular needs and priorities. Let us pinpoint the strengths and weaknesses of the best business accounts for UK sole traders.

Have a registered company? See our business account comparison for companies.

Starling is a British bank run entirely online and through a banking app. It is one of the most advanced online banks in the UK, offering different bank accounts including a free Sole Trader account specifically for self-employed people.

The business account comes with a Debit Mastercard, IBAN for international transfers and the option to add a Euro account for £2 monthly and/or US dollar account for £5 monthly. You can deposit cash into the account at any Post Office and cheques directly through the app by snapping a photo of it.

To qualify for the Sole Trader account, you need to be resident and registered in the UK as a sole trader.

Image: Starling Bank

Starling offers a full range of banking features, with 27/7 access to customer support.

Self-employed people can apply for a business overdraft, but no loans except for the coronavirus Bounce Back Loan Scheme.

The Starling Bank app has a lot of useful features such as:

For £7 per month including VAT, freelancers can subscribe to Business Toolkit available exclusively in the online web account. This will automate your bookkeeping, give an up-to-date estimate of taxes due (cash basis accounting only) and organise expenses, invoices, bills and payments.

If you prefer, it’s possible to integrate with external software for accounting such as FreeAgent, QuickBooks and Xero.

Starling’s friendly customer support is available through the app 24/7.

Choose Starling Bank if: You prefer an online bank that feels most like a ‘real’ bank with a full range of banking features.

Learn more in our Starling account review for sole traders

If you like the thought of getting someone else to do your admin, ANNA Money has nailed that with their round-the-clock messaging support in the app. You can basically fire the chatbot questions or tasks, and if the automated chatbot doesn’t know the answer, a real customer service agent will take over the chat to help within minutes.

The ANNA account comes with a Debit Mastercard.

With ANNA, the subscription cost depends on your monthly income within these limitations:

• £0/mo: Less than £500 income/mo
• £4.90/mo: £500–£2k income/mo
• £9.90/mo: £2k–£20k income/mo
• £19.90/mo: £20k–£500k income/mo

Faster Payments and BACS payments up to a limit are included on each plan (2/month on free plan, more on higher tier), as are cash withdrawals (up to £100/month on free plan, more on higher tier). Unlimited Direct Debits are included on any tier.

You get a Debit Mastercard from ANNA, which is better than the prepaid cards usually offered by other e-money accounts, but you can’t deposit cash into the account.

A clear strength of ANNA is how smoothly it manages admin tasks. For instance, just ask the chatbot to create and send an invoice to a client and it will ask about the information required for the invoice. Past the due date, ANNA can send polite invoice reminders to clients who haven’t paid yet. You can take pictures of expense receipts to save in the app, and even send physical receipts to ANNA for them to sort out. Monitor your sole trader taxes through the app as well.

ANNA does not provide an IBAN so international transfers are not possible directly, only through the third-party Payoneer platform. You can only use the business account in the mobile app – there is no web access.

An ANNA business account isn’t generally that feature-rich, but the personal approach to helping gives it a rare sense of warmth not seen in other business accounts.

Choose ANNA Money if: Your clients are primarily based in the UK and all you need are invoicing and basic bookkeeping features in a friendly app.

Learn more in our ANNA Money review

If you’re dealing with a lot of clients from abroad, then Revolut for Business could be your best choice. Not only do you have a local GBP and EUR account – you also get an IBAN code and can add other currency accounts for US dollars and a choice of 25 other currencies. This means you can keep payments in different currencies separate in the Revolut account and avoid exchange rates.

Image: Mobile Transaction

Even the free Revolut Business account allows you to hold multiple currencies in one account.

There are two Revolut Business accounts for freelancers: ‘Free’ for zero monthly costs and ‘Professional’ for £7 per month. The latter has fewer limitations and more features:

Free: 5 free local payments, £3 per in/out SWIFT transfer, 1 free team member, 0.4% markup fee on exchange rate of all currency conversions, other basic features like cash withdrawals for a 2% fee

Professional: 20 free local payments, 5 free international payments, no markup fee on exchange rate of currency conversions on up to £5k/month, 5 free team members with permission settings, subscription management, expense management, 24/7 customer support, bulk payments, payment approval workflows, plus all basic features

On both plans, you can request up to two physical Prepaid Mastercards on top of 20 virtual cards a month, and you can integrate the Business account with the accounting software FreeAgent, QuickBooks or Xero. Travellers can use the Mastercard for transactions in 150 different currencies without fees.

You cannot deposit cash into the Revolut account. The only way to top up the balance is by credit card, bank transfer or PayPal.

Choose Revolut Business if: You travel for work and receive or send international transfers regularly.

Learn more in our Revolut Business review

Monzo is the only other online business account on this list from a real bank (apart from Starling Bank). This doesn’t mean it’s the second best choice for sole traders, because Monzo Business isn’t actually as advanced as the bank’s personal accounts which they seem to prioritise.

Image: Monzo

Monzo Pro includes invoicing, accounting integration and automated Tax Pots.

There are two Monzo Business plans:

• Lite (free): With savings pots (to ring-fence money), budgeting features, domestic payments
• Pro (£5/mo): Above features plus automated Tax Pots, accounting integration, invoicing, multi-user access (limited companies only)

The Pro plan is mainly suited for companies, but freelancers can benefit from Pro’s invoicing and Tax Pots which can be set to automatically deduct the right amount of taxes to pay later to HMRC. All the ‘pots’ are for ring-fencing money for different purposes away from the main account balance.

This way, you don’t spend money reserved for something else. Monzo Business also lets you set spending limits within categories such as travel and bills. Overall, these money management features are handy, but there aren’t that many other native tools useful for sole traders.

The account is in pounds sterling only and there is no IBAN for international payments. Instead, the Monzo Business app is integrated with TransferWise for outgoing and ingoing transfers in different currencies.

A Debit Mastercard is included on all Monzo plans. This can be used globally with no mark-up on the exchange rate if paying in a different currency. You can deposit cash into the account from any PayPoint in the UK, but deposits are limited to a maximum of £1,000 during 6 months, which isn’t much at all. There’s no overdraft option for Monzo Business accounts and no business loans for sole traders.

24/7 customer support is included on all plans. What about the quality of service? Monzo has suffered from more frozen accounts in the past year than other banking providers so you do see a lot of complaints about that.

Choose Monzo Business if: You’re already banking with Monzo and want to stick to the same bank.

Learn more in our Monzo Business review

Tide Business is a simple e-money current account suitable for sole traders. It comes with a Prepaid Mastercard and can be managed through the Tide app or web browser.

Image: Tide

Tide generally works fine, but it’s not the account with most features.

The two Tide Business plans best suited for sole traders are:

• Free (£0/mo): Domestic payments 20p each, basic support
• Plus (£9.99 + VAT/mo): 20 free domestic payments, priority 24/7 support, legal helpline

All plans include basic invoicing, receipt storage, optional integration with Xero, QuickBooks and other software, and the option to hold several business accounts for things like expenses or taxes. There’s also payment scheduling, read-only access for your accountant and categorisations of transactions to make bookkeeping more manageable.

Upgrading to Plus is not immediately available to new Tide users, as the company likes to have a bit of control over this.

The account doesn’t come with an IBAN, so Tide isn’t suitable for sole traders with international clients. You can, however, deposit cash into the account at any PayPoint or Post Office.

Many users have reported inadequate customer support, but we should highlight there’s a gap in quality of service between Free and Plus. On Free, you have basic (read: slow) in-app support round the clock, but Plus gives you “priority” support plus a 24/7 legal helpline which could be useful for some sole traders.

Choose Tide if: You just want a simple e-account with general tools for managing money and payments.

Learn more in our review of Tide

Summary