Working for yourself might be one of the most satisfying career challenges. As a freelancer or solopreneur, your success will depend on your capacity for self-motivation, multitasking, and selling your services. One of the most crucial things you’ll need to do when you’re just starting as a freelancer is finding out how to handle your finances. With this in mind, opening business bank accounts is the first and most significant action you can take to begin managing your finances.
If you’re curious about the best bank accounts for freelancers and self-employed persons, we’re here to help. In this guide, we’ll examine the best freelancer & solar traders’ bank accounts on the market, discussing everything they have to offer you as a business owner.
The best business bank accounts for freelancers and sole traders.
Your best business bank account will depend on your business, financial needs, budget, and other factors.
Let’s look at some of the best options.
Since it came out in 2015, Tide has attracted more than 250,000 customers. One of the main reasons it has caught the attention of freelancers is that it takes only minutes to set up a business account and get a sort code and account number so you can start billing.
There are no monthly fees, but each transfer in and out of your account will cost you 20p, which could add up quickly if you do many things.
It’s easy to set up payments and works with the most popular accounting programs, like Quickbooks, Xero, and Sage.
For £9.99 a month, you can switch to a “Plus” account that gives you free transfers and extra services like phone support and a 24/7 legal helpline.
The Tide app does a lot of valuable things. You can send, pay, keep track of invoices, and upload receipts that match up automatically with transactions. This makes it very easy to keep track of expenses.
Plan to switch from being a sole proprietor to a Limited company? Tide says they will even pay your company registration fee and help you set up a bank account for your business.
Even though they don’t have the same licenses as a “real” bank, their website says that your money is safe.
Starling is a licensed online bank. Therefore your funds are protected for up to £85,000 by the FSCS.
It interfaces with Xero, Quickbooks, and FreeAgent, and no monthly or transaction costs are associated with its business account. As a licensed bank, Starling also provides overdrafts and loans.
If you’re a freelancer & sole trader who needs to deposit a lot of cash (which isn’t very common, but it could happen), there is a 0.3 per cent cost with a minimum £3 charge.
Even the account with no fees has excellent money management tools. If you require more, you may add a Business Toolkit for £7 per month. The toolkit enables the creation, sending, and matching of invoices, execution of HMRC tax computations and tax reports, recording VAT, and submitting VAT returns.
Starling also offers accounts in Euros (sole traders and Ltd firms) and US Dollars (only Ltd companies) for an additional cost, which is ideal if you frequently work in these currencies.
Coconut primary concentration is on accounting software solutions at present. Thus, you can link additional bank and credit card accounts to it.
Their monthly fees are £3 + VAT for the ‘Side Hustle’ plan and £10 + VAT per month for the ‘Professional’ plan. This is a reasonable price for accounting software but not for banking fees. And it appears that’s where Coconut is headed—a streamlined version of the “large” cloud-based accounting software.
With ‘Side Hustle,’ you can only send three monthly invoices. If you pay the Professional charge, there are no limits on invoices.
One helpful tool estimates the amount of tax you are projected to owe, providing a real-time snapshot of your finances. We have come to expect this from accounting software, albeit at a far higher monthly fee. The Coconut program helps you manage your costs, invoices, and taxes in one location.
It is uncertain if they will return to offering business bank accounts; for the time being, it is not an option; yet, it has been mentioned because many still recommend Coconut when asked about banking for freelancers and sole proprietors.
Mettle is an online business account administered by NatWest – it’s like NatWest trying to be cool, and to be fair, they’ve pulled it off.
Free to open, with no monthly fees, and easy to set up with the mobile app. However, FreeAgent’s primary selling feature is that it is provided at no cost to customers. (NatWest possesses FreeAgent) It also interfaces with programs such as Xero and Quickbooks, so don’t worry if you use alternative software.
Even though it comes with FreeAgent, you can create and send invoices within the app; you are notified when they are received, and payments are immediately matched to the appropriate invoice. Expenses are also simplified.
Freelancers are also big fans of Monzo’s business accounts. Like Starling, they are a fully regulated bank, which means they follow the same rules as high street banks. You can set up an account quickly from your phone, just like with Starling.
The basic “Lite” account from Monzo doesn’t cost anything, but it doesn’t work with any accounting software, so many freelancers might feel like they aren’t getting enough out of it.
For $5 a month, Monzo’s “Pro” account gives you extra features like easy invoicing and integration with Xero, FreeAgent, and Quickbooks. They also give you a free subscription to Xero for six months, and customer offers like discounts from well-known brands.
If you’re considering opening a freelancer or sole trader bank account and want to make sure it fits with your current bookkeeping and accounting system, it’s a good idea to check out the perks. For example, Monzo gives you six months of Xero for free. Others offer significant discounts on other software or even offline services.