Business bank account
In the UK there is no blocked capital deposit account before incorporation – you incorporate first and open the business bank account afterwards. For a limited company, a separate account is practically indispensable; for sole traders it is strongly recommended.
Why a business account
A limited company is a separate legal person: its money is not your money. A business account keeps company payments clearly separate, makes bookkeeping and Making Tax Digital easier and shows banks and investors a clean track record. Sole traders may legally use a personal account, but many banks’ terms don’t allow business use of personal accounts.
How to go about it
Compare high-street banks and app-based providers on fees, cash handling, integrations with accounting software and support. Banks verify the company and its directors and persons with significant control, so have your certificate of incorporation, ID and expected turnover ready. Eligible deposits are protected by the Financial Services Compensation Scheme up to £120,000 per bank (since 1 December 2025).
Useful for sole traders and partnerships too
If directors take money out of the company other than as salary or dividends, or pay company costs privately, this is recorded on the director’s loan account. Keep it clean: overdrawn loan accounts can trigger additional tax. A separate account for each business makes all this transparent from day one.
Frequently asked questions
Do I need a special account to set up a limited company?
No. In the UK you incorporate first and open the business bank account afterwards. There is no blocked account and no proof of capital before incorporation.
When can I use the money in my company account?
Straight away, for business purposes. The money belongs to the company: you take it out as salary, dividends from distributable profits or as a recorded director’s loan.
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