Compare Business Savings Accounts
Business Savings Accounts
Why we like it: Interest paid at maturity. Maximum deposit £750,000. FSCS Protected. Winner of Platinum Feefo Trusted Service Award in 2024. Available for: Sole traders – trading in the UK, Limited companies/PLCs/LLPs – incorporated in the UK, Partnerships, Charities – registered in the UK, Clubs and associations, Small local authorities/PCCs/councils, Schools, Religious organisations, Small financial institutions, Credit unions, Trusts. No withdrawals permitted
Why we like it: Unlimited withdrawals. Interest paid annually. Maximum deposit £250,000. FSCS Protected. Winner of Platinum Feefo Trusted Service Award in 2024. Available for: Sole traders – trading in the UK, Limited companies/PLCs/LLPs – incorporated in the UK, Partnerships, Charities – registered in the UK, Clubs and associations, Small local authorities/PCCs/councils, Schools, Religious organisations, Small financial institutions, Credit unions, Trusts.
Why we like it: You must open a Tide Business Account to open a Tide Instant Saver Account. Interest paid monthly on savings. No limits or fees on withdrawals. Eligible deposits with ClearBank are protected up to a total of £85,000 by the Financial Services Compensation Scheme (FSCS).
Why we like it: Interest paid annually. Maximum deposit £750,000. FSCS Protected. Winner of Platinum Feefo Trusted Service Award in 2024. Available for: Sole traders – trading in the UK, Limited companies/PLCs/LLPs – incorporated in the UK, Partnerships, Charities – registered in the UK, Clubs and associations, Small local authorities/PCCs/councils, Schools, Religious organisations, Small financial institutions, Credit unions, Trusts. No withdrawals permitted
Why we like it: Interest paid annually. Maximum deposit £750,000. FSCS Protected. Winner of Platinum Feefo Trusted Service Award in 2024. Available for: Sole traders – trading in the UK, Limited companies/PLCs/LLPs – incorporated in the UK, Partnerships, Charities – registered in the UK, Clubs and associations, Small local authorities/PCCs/councils, Schools, Religious organisations, Small financial institutions, Credit unions, Trusts. No withdrawals permitted
Why we like it: Instant access - deposit or withdraw funds 24/7. Earn 4.08% AER* (variable), paid monthly. No monthly fee. FSCS Protected for eligible deposits up to £85,000. For businesses registered 1 year and over only. Keeping less than £50,000 in the account may earn a reduced rate of interest and may incur fees. You will automatically have access to Allica Instant Access Savings when you open an Allica Business Bank Account. T&Cs apply
Why we like it: Deposit between £1,000 and £1,000,000. No fees or charges for day to day services. 14 Day cooling off period – if you change your mind within 14 days of funding your new business savings account, your savings will be refunded. Minimum balance at all times – £1,000. An interest rate of 0.05% AER is payable on balances below £1,000. No additional deposits or withdrawals
Why we like it: Deposit between £1,000 and £1,000,000. No fees or charges for day to day services. 14 Day cooling off period – if you change your mind within 14 days of funding your new business savings account, your savings will be refunded. Minimum balance at all times – £1,000. An interest rate of 0.05% AER is payable on balances below £1,000. No additional deposits or withdrawals
Why we like it: Deposit between £1,000 – £1,000,000. Unlimited withdrawals free of charge (via online self service). No fees or charges for day to day services. 14 day cooling off period – if you change your mind within 14 days of funding your new business savings account, your savings will be refunded. Minimum balance at all times – £1,000. New account applications only be accepted from limited (or unlimited) companies. Existing Aldermore Business Savings customers that are sole traders and partnerships will be able to operate their existing accounts as normal
Why we like it: Let InvestEngine build and manage an investment portfolio for you. Alternatively invest for yourself with a choice of 650+ exchange traded funds (ETFs). Invest via a lump sum or regular savings plan (weekly, biweekly or monthly basis). If you don’t already have a LEI, InvestEngine can provide one to customers for free for the first year and it will be applied automatically after you have funded your account with a minimum of £100. You can withdraw cash without notice and with no exit fees. Free tools to help you invest. Covered by the Financial Services Compensation Scheme (FSCS). Flat fee of just 0.25% a year for Managed portfolios (ETF costs also apply). DIY investing service is fee free, with no buying and selling costs and no account charges (all you pay is ETF costs). Open to Limited companies and partnerships. If you are investing as a UK-based company, your returns are subject to the UK corporation tax regime. Capital at risk. Tax treatment depends on individual circumstances and all tax rules may change in the future
Disclaimer: The value of your investments can fall as well as rise, so you could get back less than you paid in.
A business savings account is more than just a place to stash your cash.
What is a Business Savings Account?
A Business Savings Account is a type of deposit account that a business or an organisation holds with a bank or other financial institution.
It's not that different from a personal savings account. But it's designed specifically to meet the needs of businesses - from small start-ups to established corporations.
Business savings accounts are perfect for safeguarding business reserves, earning interest, and planning for the future.
It's a great way to keep your business funds separate from personal finances, an aspect that can be handy for tax purposes and cash flow management.
Business Savings Accounts in Financial Planning
The significance of a business savings account can't be overstated. It plays a vital role in your financial planning, offering benefits beyond just safekeeping your money.
- Cash Flow Management
A business savings account helps you manage your cash flow efficiently. It's ideal for setting aside funds for future expenditures or unexpected costs.
- Interest Earnings
Unlike a business current account, a savings account earns interest on the money you deposit. Over time, this can lead to significant growth in your business capital.
- Financial Security
Having a dedicated business savings account provides financial security. It acts as a safety net during times of business uncertainties or market fluctuations.
- Professional Image
Lastly, having a business savings account can help establish a professional image for your company, demonstrating financial prudence and reliability to potential investors and clients.
Understanding the basics of a business savings account and its importance in financial planning is the first step in optimising your business finance.
Understanding the Different Types of Business Savings Accounts
Navigating financial landscapes is all about understanding your options. When it comes to business savings accounts, you're spoilt for choice. Let's break down the types of business savings accounts, so you can decide which one suits your business needs.
Basic Business Savings Account
A Basic Business Savings Account is the simplest form of savings account available for businesses. It provides a safe place to store your funds while earning a modest amount of interest.
Most financial institutions will require a minimal initial deposit to open a basic business savings account. After that, you typically need to maintain a minimum balance to avoid any service charges.
This type of account is best for small businesses or start-ups that want to separate their business income from personal finances while accruing interest.
Business High-Yield Savings Accounts
If you're looking to maximise your earnings from interest, a Business High-Yield Savings Account could be your best bet. High-yield savings accounts offer significantly higher interest rates compared to basic savings accounts, meaning your business's savings grow faster.
However, they usually require a higher minimum balance and limit the number of transactions you can make each month. Despite these restrictions, the potential for greater interest earnings makes this account type attractive for businesses with larger cash reserves.
Business Money Market Savings Accounts
A Business Money Market Savings Account is a hybrid of a savings and chequing account, providing flexibility while also offering interest.
With this type of account, you can earn interest on your savings and have check-writing abilities, usually limited to a certain number per month. Some money market accounts also provide a debit card for easier access to funds.
Benefits of Having a Business Savings Account
Let's take a look at the key advantages that these accounts offer.
Building Business Capital
First and foremost, a business savings account is a fantastic tool for building capital. Your business income isn't static - it ebbs and flows. By regularly setting aside a portion of your profits into your savings account, you can grow your business capital over time. It's a disciplined approach to safeguard your business's future.
Emergency Funds Security
Every business faces unexpected expenditures, be it an equipment malfunction, a sudden need for more inventory, or an unexpected dip in revenue. A business savings account serves as an emergency fund, offering a financial buffer against such surprises.
Earning Interest
Unlike a current account, a business savings account earns interest on your deposits. While the interest rates may vary depending on the type of savings account and the bank, over time, these earnings can add a substantial amount to your business funds.
Financial Cushion for Unexpected Expenses
A business savings account provides a financial cushion to help your business sail smoothly through financial rough patches.
Choosing a Business Savings Account
Selecting the right business savings account is not just about finding the highest interest rate.
Interest Rates
Interest rates are a significant consideration as they directly affect your earnings. Look for a savings account that offers competitive rates.
Minimum Balance Requirements
Many business savings accounts require you to maintain a minimum balance to avoid fees. Ensure you're aware of these requirements before choosing an account.
Transaction Limits
Some savings accounts limit the number of transactions you can make each month. If you anticipate needing regular access to your funds, this could be a key factor in your decision.
Accessibility and Banking Services
Consider how easy it is to access your funds. Does the bank offer online banking, mobile banking, and ATM access? Also, look at other services the bank offers, such as business loans, credit cards, and merchant services.
Security and Insurance Coverage
Lastly, make sure the financial institution you choose for your business savings account is insured by the Financial Services Compensation Scheme (FSCS). This ensures that your money is safe, even if the bank fails.
Comparing Business Savings Accounts
Selecting a business savings account is not a one-size-fits-all affair.
Different financial institutions offer varying features, interest rates, and services.
Assessing Your Business's Specific Needs
When comparing different savings accounts, it's crucial to assess your business's specific needs.
Do you need high interest, or is access to your funds more important? Are you looking for additional banking services?
Consider the following aspects:
- Frequency of transactions: If you need frequent access to your savings, consider banks that offer higher transaction limits or money market accounts.
- Online and mobile banking: In today's digital age, having access to your account anytime, anywhere, is a significant advantage. Look for banks that offer robust online and mobile banking platforms.
- Additional services: Banks often provide a suite of business services. These may include business loans, merchant services, invoice financing, and treasury services. If these are relevant to your business, consider them when choosing a bank.
Choosing the right business savings account is a critical decision that can influence your business's financial health and growth.
How to Open a Business Savings Account
- Choose the Right Type of Business Savings Account
Based on your financial goals, liquidity needs, and transaction requirements, decide on the type of savings account that suits your business best. This could be a basic business savings account, a high-yield savings account, a money market account, or a certificate of deposit.
- Select a Bank
Choose a financial institution that aligns with your business needs. Consider factors such as interest rates, minimum balance requirements, accessibility, transaction limits, and additional services offered by the bank.
- Gather the Required Documentation
Most banks will require certain documents to open a business savings account. These typically include:
- Proof of business registration
- Business licence
- Employer Identification Number (EIN) or National Insurance number for sole proprietors
- Partnership agreement for partnerships
- Articles of Incorporation for limited companies
- Apply for the Account
Once you've gathered all the necessary documentation, you can apply for the account. Some banks allow online applications, while others might require you to visit a branch in person.
- Fund Your Account
After your application is approved, you'll need to deposit the required minimum balance to activate your account.
Things to Keep in Mind
Here are a few things to keep in mind as you go through this process:
- Read the Fine Print: Before you commit to a bank and a specific savings account, ensure you've thoroughly read and understood the terms and conditions.
- Regular Reviews: Periodically review your business savings account to ensure it's still serving your needs effectively. If your business evolves, your financial requirements might also change.
- Consider Multiple Accounts: If your business has multiple savings goals, you might want to open more than one savings account. This can help you organise and track your funds more effectively.
Effective Management of Your Business Savings Account
Once you've opened a business savings account, it's essential to manage it effectively to maximise its benefits.
- Regular Contributions
Regular contributions to your business savings account can help your business capital grow steadily.
Decide on a set percentage of your profits to deposit into the savings account each month.
This consistent saving strategy can provide a robust financial base for your business.
- Monitor Your Balance
Keep an eye on your account balance. If your account has a minimum balance requirement, ensure you're maintaining it to avoid any fees.
Also, monitoring your balance helps you track the growth of your savings and the interest you're accruing.
- Keep Business and Personal Finances Separate
This can't be stressed enough: always keep your business and personal finances separate.
Not only does this provide a clear picture of your business’s financial health, but it also simplifies tax preparation and legal compliance.
- Utilise Online and Mobile Banking
Take advantage of online and mobile banking services. These digital platforms can help you monitor your account, transfer funds, and manage your savings conveniently.
- Review Your Account Regularly
Business needs evolve, and so should your financial strategies. Regularly review your business savings account to ensure it still serves your business needs effectively. Consider factors such as interest rates, transaction limits, and any fees or charges associated with the account.
- Automate Your Savings
If your bank offers it, consider setting up automated transfers to your business savings account. This ensures regular contributions to your savings and helps maintain a disciplined approach to saving.
- Reinvest Your Interest
Instead of withdrawing the interest earned, consider reinvesting it back into your savings. This practice can help accelerate the growth of your business capital.
FAQs
What is a business savings account?
A business savings account is a type of bank account that businesses use to save funds while earning interest. These accounts are separate from business current accounts, which are primarily used for everyday transactions. Business savings accounts provide a way for businesses to grow their capital while having a financial cushion for unexpected expenses or future investments.
Why should a business open a savings account?
A business savings account provides a safe place for companies to store and grow their excess capital. It provides financial stability, helps manage cash flow, and prepares a business for unforeseen circumstances. Additionally, the interest earned on the account can contribute to the business's overall growth.
How does a business savings account differ from a personal savings account?
Business savings accounts are designed to cater to the needs of businesses, whereas personal savings accounts are for individual use. While both types of accounts earn interest on the deposited amount, business savings accounts often come with higher transaction limits and may offer additional services useful for businesses.
What types of business savings accounts are there?
There are several types of business savings accounts, including basic business savings accounts, high-yield business savings accounts, money market accounts, and certificates of deposit. The choice depends on a business's financial needs and goals, such as liquidity requirements and interest rate preferences.
What do I need to open a business savings account?
Typically, you'll need proof of business registration, a business licence, Employer Identification Number (EIN) or National Insurance number for sole proprietors, and potentially other documents depending on your business structure. Each bank may have specific requirements, so it's best to check with the bank directly.
Can I access my business savings account online?
Yes, most financial institutions offer online and mobile banking services. This means you can monitor your account, transfer funds, and manage your savings at your convenience.
Can I make withdrawals from my business savings account?
Yes, you can make withdrawals from your business savings account. However, keep in mind that excessive withdrawals may lead to fees or even impact the interest you earn. Always check the terms and conditions of your specific account for any transaction limits or penalties.
Compare business savings accounts
A business savings account is a good idea for most businesses as it allows you to earn interest on money you are not using for day-to-day business purposes. This can simply be a place to store any significant cash surplus, or it could act as a reserve, allow you to save up for new equipment, premises or any other medium to long term large expenditures.
Getting the best possible rates on your business savings account ensures you get the highest return you can for your money, helping your savings to grow over time. Exactly what type of business savings account you should apply for will depend on the type of company, number of employees, annual turnover and other factors.
What to look for in a business savings account
To make sure your business savings account offers everything you need while providing a good return, you should check the following key details before making an application:
- Interest rates
- Minimum deposit
- Maximum deposit
- Notice period to make a withdrawal
- Any fees or penalties for making withdrawals
- How your interest is calculated and paid
It is a good idea to compare these conditions on as many different accounts as possible from different providers. This will allow you to be confident that you are getting an account that suits your requirements while paying a good rate of return.
Types of business savings accounts
There are several main types of savings account for businesses. Which type will be suitable for you will depend on exactly what you intend to use the account for.
Instant access business savings account
If you want somewhere to earn interest on any surplus on your day-to-day cashflow, while still having access to the money when you need it, an instant access account is a good choice. This type of account can usually be opened with a deposit from as low as £1.
30 day notice business savings account
If you have a surplus that you do not need for daily business purposes, you may be better placing it into a 30 day notice account. This will normally earn you a better rate of interest than an instant access account, but means you will have to let the bank know 30 days in advance when you wish to withdraw funds.
You may be able to take money out with less notice than this, but will normally pay a penalty calculated based on the interest on the amount withdrawn.
Clients’ business savings account
If you are a professional company entitled to hold clients’ funds, you could earn interest on these funds by placing them in a savings account. Depending on the nature of your business and how you wish to structure your clients’ deposits, you can hold them collectively in a single account or have separate designated accounts for each client.
Here's a table comparing different types of savings accounts in the UK by key features:
|
Type of Account |
Interest Rates |
Accessibility |
Risk |
Special Features |
|
Easy Access Savings |
Lower |
High (Instant Access) |
Low |
Flexibility to deposit and withdraw at any time |
|
Fixed Rate Bonds |
Higher (Fixed) |
Low (Limited Access During Term) |
Low |
Offers a guaranteed return |
|
Notice Savings |
Moderate |
Moderate (Notice Needed) |
Low |
May offer better rates than Easy Access |
|
Regular Savings |
Moderate-High |
Moderate (Limit on Withdrawals) |
Low |
Rewards regular saving |
|
ISAs |
Varies |
High (Instant Access) or Low (Fixed Rate) |
Low |
Tax-free interest up to certain amount |
|
Junior ISAs |
Varies |
Low (Until Child Turns 18) |
Low |
Tax-free savings for children |
|
Help to Buy ISA |
Varies |
Low (For Property Purchase) |
Low |
Government bonus for first time home buyers |
Remember, the specifics of each account can vary between different financial institutions, so it's always important to read the terms and conditions carefully.
Find the best business savings account for you
In order to maximise the value of your savings, you need to get an account offering the highest possible interest rate on your deposits. You should also consider how much you intend to deposit and how quickly you are likely to need to access your savings.
At the top of this page, you will find our business savings account comparison tool. This allows you to quickly compare leading accounts from top lenders across the market so you can see who offers the best value for you while matching your saving requirements.
