Why should I open a business bank account?

If you’re in business either as a company or as a sole trader, there are plenty of good reasons to get a business bank account.

They range from the practical – managing your business money separately from your personal spending – to the reputational – showing customers that you are a legitimate business, even if you are a sole trader.

But there are downsides too, such as the high transaction fees and difficult application processes that you might face at your usual bank.

So why get a business bank account if the application process is going to be difficult? Well it depends if the pros outweigh the cons on balance, and if you can find an easier alternative like an Arro Business Account.

The argument in favour

There are a few good reasons why you might want to open a business bank account when you set up in business in your own right.

It makes it easier to manage your earnings from your business – and with separate accounts for different business activities you might engage in, you can maintain separate cash flows, profit and loss.

At the end of the year, an account that is dedicated solely to your business practices can make it easier to work out how much tax you owe, which is crucial if you are self-employed and need to self-assess.

Finally, especially as your level of business activity grows, your current account provider is likely to be reluctant to let you keep using a personal bank account for business activities – it might even be against your terms of service.

The argument against

Banks make it remarkably difficult to open a business bank account, considering that they will usually try to push you into opening one if they realise you are self-employed.

The application process may be long, with lots of paperwork, and they might ask for things you just don’t have, such as a fully costed five-year business plan with estimated order book.

Plenty of people go into business with no clear idea of what their five-year earnings will be, and a business plan sometimes just ties you down to one income stream instead of many, so it’s not realistic to have one in every instance.

And finally, banks often see a business customer as a source of extra income – you are likely to pay substantial transaction fees for even the basic account activities, and may find you receive much more marketing about financial products like business loans.

The argument for Arro Business Accounts

Arro Business Accounts offer an alternative to business bank accounts. We are proud of the fact that we are not a bank – we do things differently, with an account designed to meet your needs.

Many transactions, especially if you only transfer money a few times each month, are completely fee-free, and even if you carry out higher volumes of activity, we always make you aware of our low transaction fees upfront.

We offer guaranteed approval for all eligible applicants, subject to being over 18, with a current UK address, and our basic Fair Fit test. There is no background credit check at all, ever.

That means when you start trading independently, you can set up an Arro Business Account with confidence that you will be accepted in under five minutes – a fast and easy path to a more professional way to manage business money.

What do I get?

When you register an Arro Business Account, you get:

  • An online business account with sort code and account number just like a bank account.
  • Access to the unique Arro Money online dashboard to view transactions and manage your account.
  • Many ways to pay suppliers: Faster Payments, Direct Debit, ATM withdrawals, card payments etc.
  • A Business MasterCard® debit card issued in your name and linked to your Arro Business Account.

Together this all adds up to a professional profile for your money management, with an account dedicated to your business, a powerful online dashboard to keep track of payments in and spending out, and a stylish Business MasterCard® for work-related card payments.

It costs nothing to apply, with just a small monthly management fee once your account is set up. There are no fees on receiving credits into your account, or setting up new Direct Debits.

Up to ten Faster Payments or online transfers and ten ATM withdrawals are fee-free too, with just small charges above this amount and for other transactions, such as using your card in a foreign currency or if a payment you try to make is rejected – and we always make sure to publish our full fees list upfront.