Setting up a limited company raises a practical question in the first week: does the company need an account of its own, or can you keep using your personal one? This guide explains what the law says for a UK limited company, why directors almost always open a separate account, what you need to apply, and what to compare before you choose.
It applies to companies registered at Companies House. Facts are taken from GOV.UK and legislation.gov.uk pages checked in November 2026.
Does a UK limited company legally need a business account?
No section of company law says that a limited company must hold a bank account. Two other rules, however, make an account close to unavoidable. A limited company is a legal entity separate from its owners, so its money belongs to the company, not to you. And section 386 of the Companies Act 2006 requires every company to keep adequate accounting records, including day-to-day entries of all sums of money received and spent.
In practice, the cleanest way to meet that duty is to run the company’s money through an account in the company’s name. Some providers describe this as a legal requirement. The accurate position is that the law requires proper records, and a separate account is the easiest way to keep them.
Why directors keep company money in its own account
The simplest habit is to open a free business account in the company’s name before the first invoice goes out, so every payment in and out is already kept apart from your own money. Three reasons make this worth doing from day one.
Bookkeeping and Corporation Tax
Directors are responsible for keeping company and accounting records and for filing the company’s annual accounts and Company Tax Return, even when an accountant does the work. The GOV.UK guide to setting up a private limited company sets this out. If the company’s money runs through one account, the statements show income and costs almost line by line. If personal spending is mixed in, someone has to untangle every transaction before the figures can be trusted.
Director’s loan account
When you pay a company cost from a personal account, or take money out of the company without a salary or dividend, the sum is normally recorded as a loan between you and the company. A few small amounts are easy to track. A year of mixed payments is not, and there are rules to follow whenever money is taken out of a limited company. Keeping company money in its own account keeps the loan balance small and readable.
Credibility and credit history
Customers and suppliers who pay a company expect to see the company’s name on the account. Over time, a trading history in the company’s own name also gives lenders something to look at when the company applies for finance.
Sole director and shareholder: does the rule change?
No. Owning every share and being the only director does not turn the company’s money into yours. The company can pay you a salary or dividends, repay your expenses and, within the rules, lend you money, but each of those is a separate, recorded step. The same duty to keep accounting records applies, so a sole director gains just as much from a separate account.
Can a limited company have more than one account?
Yes. Many companies keep one account for daily spending and another for money set aside. Common uses are:
- A tax reserve for Corporation Tax and VAT, so the money is not spent by accident.
- Payroll, so salaries and pension contributions are paid from a known pot.
- A spending account with a card for staff or a single project.
Several accounts keep the cash picture clear, but each one adds statements to reconcile, so open only the ones you will use.
What you need to open a business account for a limited company
Requirements depend on the provider, but HSBC UK’s guide lists the usual ones, and most providers ask for something similar. You will normally need:
- proof of identity for each director, such as a passport or driving licence;
- proof of your business address;
- director details;
- business documents such as the articles of association or registration documents.
You must be 18 or over and have a UK address. Some providers add turnover limits or ask what the company will do, so read the eligibility rules before you apply and check that the details you give match what Companies House holds.
What to compare before you choose
Accounts differ less in what they are than in how they charge and what they connect to. Compare them on the way your company will actually use the account.
| What to check Why it matters | |
| Monthly fee | A small fee adds up over a year; check what the fee includes. |
| Payment charges | Look at the cost of transfers, card payments and international payments. |
| Cash and cheques | If customers pay in cash, check how you can pay it in and what it costs. |
| Accounting software | A link to your bookkeeping software saves manual entry. |
| Eligibility | Turnover limits, company type and age of the company can rule an account out. |
Start with your own numbers: how many payments you expect each month, whether you take cash, and which software you use. The account that looks cheapest on a price list is not always the cheapest for your pattern of use.
If an owner or director lives outside the UK
The company itself still has to be registered in the UK, and many providers ask for a UK address from the people they onboard. According to business.gov.uk, opening an account can take much longer for people based outside the UK, because the provider runs extra checks on directors, owners and any foreign investors. Allow extra time, keep your identity and registration documents ready, and ask each provider whether it accepts owners abroad before you apply.
Frequently asked questions
Does a limited company need a business account?
No section of company law names one, but the company must keep records of every sum it receives and spends, so in practice it needs its own account.
Can I use my personal account for my limited company?
The company’s money belongs to the company, not to you, so mixing it with personal money makes records unreliable. Check the terms of your account before you try.
Does a sole director need a separate account?
Yes. Owning all the shares does not change the fact that the company is a separate legal entity.
Can a limited company have more than one account?
Yes. Some companies keep a second account for tax or payroll to separate those sums from daily spending.
What do I need to open a business account for a limited company?
Usually proof of identity for the directors, proof of business address, director details, business registration documents and a UK address. Requirements vary by provider.