November 30, 2021 Last updated November 30th, 2021 823 Reads share

Business Registration and Banking in UK — Tips for Freelancers, Founders, and Consultants

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Setting up a business in the United Kingdom is easier than ever. You can even do it from the comfort of your home! However, aspiring entrepreneurs must still make important decisions. A suitable business structure, registration services and banking are three primary choices. Follow our guide to get started in the right way. 

Online providers offer packages with quick registration and banking. Founders can also enjoy app based business banking with a secure account. FinTech has made the setup procedures a breeze, but should you become a sole trader or launch a private limited company? Here are the key things to know in 2022.

Benefits of Setting up a Private Limited Company 

This option is preferable for several reasons. First, you have limited personal liability, as the term suggests. If the business goes downhill, you will not need to worry about losing any personal assets. 

Secondly, this option is more beneficial in terms of taxation. You will keep more of your income. A limited company in the UK must pay Corporation Tax on profits. In comparison, sole traders pay Income Tax (which is higher) and National Insurance for classes 2 and 4.

Personal Liability: Sole Trader vs. Limited Company

A limited company is a separate legal entity whose owners are shareholders. If a lawsuit is filed, the company is sued, while its shareholders or directors are only held liable in extreme cases. This may happen if they perpetrate fraud, commit particular offenses like corporate manslaughter, or deliberately avoid tax. 


A sole trader is a business, the owner and the manager or proprietor. If the company gets sued, this person is sued personally. Exceptions require applicable insurance, such as professional indemnity, products and services liability, etc.


Registration Procedures: Overview

You can set up a company the old-school way by contacting Companies House, the entity that registers and dissolves businesses in the United Kingdom. Using an intermediary speeds up this process and eliminates the hassle. An online registration company will assign an agent who will handle the paperwork on your behalf. 

In just 5 – 5.5 business days, you will become the owner, director, and shareholder of your private limited company. In addition to a bank account, the company may also provide a banking app that will give you full control over the cash flow. You can start running your business immediately. 

How to Open a Business Bank Account Online

There are enterprises that provide company registration and business accounts, so you can get everything in one package. After registering with Companies House, you can open an account and get a debit card that goes with it. It is preferable to choose providers that have a proprietary app, so you can track and manage your cash flow easily. Note the following:

  • Your company may not have any other owners or directors.
  • You must be a UK resident. A bank statement, a tax return, a utility bill, or a council bill may serve as proof. 
  • The agent will ask for a valid ID document with a photo, and they will compare it against your selfie video.
  • Your debit card should arrive in up to 10 working days. 
  • Typically, online registration providers allow a limited company to have a single bank account, but this may change in the future. 

Access and Security 

You should be able to grant and revoke permissions to other users, such as your employee or accountant. These people will be able to view your transactions, invoices and contracts, and download bank statements.

Two-Factor Authentication (aka two-step verification) is mandatory for secure access. Make sure there is an opportunity to freeze and unfreeze the card if you lose it. The company should provide a replacement quickly. 

Check the transaction limits in advance. Usually, you should be able to send or receive up to £50,000 per transaction. Online banking may be limited to payments within the UK, so you will need to use your card for international transfers. 

How to Choose a Provider

FSCS deposit protection, which applies to banks, building societies and credit unions, is ideal. However, the definitions of banking have changed a lot since the advent of FinTech. Now, FSCS is neither a primary nor a mandatory requirement.

If FSCS is not available, but the company keeps your funds in a ring-fenced account of a Tier 1 UK Bank, you should have peace of mind. Your money will still be protected from any difficulties in the provider’s business, as the company does not have access to it. For example, such accounts are provided by Railsbank. 

Aside from reputation and feedback, pay attention to licensing requirements. Make sure the provider is authorized by the Financial Conduct Authority. This will confirm that it is a legal, responsible, and ethical e-money agent.

Hillary Walker

Hillary Walker

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