Four issues that catch people out
Fee schedules look harmless until you count transfers. Entry-level accounts often carry no monthly charge, then take roughly 20p each time money moves in or out. A sole trader making a hundred transfers a month can end up paying more than someone on a £12 monthly plan. The headline number in an online business bank account advert is rarely the whole story.
Cash still costs money to bank. A café in Bradford or a market trader in Leeds takes cash that has to land somewhere. App-based providers usually route deposits through the Post Office or PayPoint and charge a percentage, often with a minimum. If cash forms more than a thin slice of your turnover, read that fee line carefully before signing up.
Deposit protection is not identical across providers. Licensed banks hold eligible deposits under the Financial Services Compensation Scheme. Some app-first providers operate as e-money institutions, where client money is safeguarded but not covered in the same way. Neither model is wrong. You simply need to know which one you are picking, because an FSCS protected business bank account behaves differently from a safeguarded e-money wallet if a provider fails.
Tax admin now lives inside the account. Making Tax Digital for VAT, quarterly updates and the Self Assessment cycle all depend on clean transaction data. An account that feeds Xero, QuickBooks or FreeAgent without CSV exports saves real hours. One that does not tends to cost you an accountant's time every quarter.
How the main options compare
| Provider | Monthly cost on the standard tier | Best suited to | Strengths | Watch-outs |
|---|
| Starling Business | No monthly fee | Sole traders and limited companies wanting a licensed bank | FSCS protection for eligible deposits, built-in bookkeeping tools, current account switch service | Cash deposits charged at 0.7%, minimum £3 |
| Monzo Business | Lite £0, Pro £9, Team £25 | Simple UK-only trading with light admin | Clear published fee schedule, UK transfers at no charge, tax tools in-app | Invoicing and fuller accounting sit behind the paid tier |
| Tide | Entry tier £0; paid plans roughly £10 to £60 plus VAT | First-time limited company directors, invoice-heavy work | Invoice tools, accounting add-ons, fast digital onboarding | Per-transfer charge on the entry tier; not a licensed bank itself |
| Mettle | No monthly fee | One-person sole trader accounts | Accounting software included at no extra monthly cost, no transaction fees | Single user only, no international payments, no overdraft |
| Revolut Business | Paid plan required for most business features | Importers, exporters, anyone holding several currencies | Multi-currency balances, rate transparency | E-money rather than a deposit-taking bank |
| High street banks (Lloyds, NatWest, Barclays) | Fee often waived for an introductory period of 12 to 18 months, then typically £5 to £10 monthly | Cash-heavy trades, borrowing, face-to-face support | Branch access, overdrafts, structured lending | Slower onboarding and paperwork |
Matching the account to how you actually trade
Invoicing clients and rarely touching cash
Take a typical case. Sarah, a freelance copywriter in her mid-thirties working from Sheffield, opened an entry-tier account on a Sunday evening and was invoicing by Tuesday. For her first year the per-transfer charge was trivial. By month fourteen she was paying suppliers weekly and billing retainer clients monthly, and the same behaviour that had cost her pennies was costing several pounds. Moving to a paid tier cut that line, and the invoice templates removed a separate subscription. The lesson is not that one provider is better. It is that your payment pattern changes, and the fee structure should be rechecked once a year.
Cash-heavy businesses
Florists, barbers, takeaways and market traders in West Yorkshire and Greater Manchester face a different arithmetic. Post Office deposits at 0.7% with a £3 minimum add up fast on a few thousand pounds of weekly takings. A traditional business current account with a waived introductory fee, plus a local branch or a business banking app that accepts cash, often works out cheaper for this group. Ask each provider where cash can be paid in near you, because "business bank account near me" searches usually return branches that no longer handle cash.
Cross-border trade
If you buy stock from the EU or invoice US clients, multi-currency holding avoids repeated conversion. Check whether the rate markup applies to card payments as well as transfers, since that is where the margin hides.
A short checklist before you apply
- Write down last month's numbers. Count transfers in, transfers out, cash deposits, card payments in foreign currency. Two minutes with a bank statement tells you which fee model fits.
- Confirm the protection model. Look for FSCS wording on the provider's own fee or legal pages rather than a comparison site.
- Check the switching route. The Current Account Switch Service moves direct debits, standing orders and payees, and redirects incoming payments for a period. Most digital providers support it; ask before you commit.
- Test the software link. If you already run FreeAgent or Xero, confirm the feed is included at your tier rather than sold as an add-on.
- Use local support. Growth Hubs in Leeds, Manchester and Bristol offer free guidance sessions on business finance and banking. The government Business Support Helpline answers setup questions, and the British Business Bank's finance hub explains lending options that sit alongside a current account.
One more habit worth forming: keep a second account with a different provider. Payments processors occasionally freeze incoming funds for review, and a spare account with a small balance keeps payroll and HMRC deadlines moving while that resolves.
Apply to the provider whose fee schedule survives your own numbers, not the one with the nicest onboarding screens. Then diarise a review for the same month next year, because the account that fit your first six months rarely fits your second year.
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