Top 6 mistakes when opening a business account online in the UK

Online onboarding makes UK business accounts fast to set up – often within a day or two – but simple document errors still trip up many applications. Small businesses and startups must pick the right provider and prepare carefully to avoid needless rejections.

Top 6 mistakes to avoid when opening a UK business account online

Mistake 1: Mismatched company and director details

If the name, address or registration data you enter does not exactly match official records, the bank will flag the discrepancy. For example, any variation in a company name or a director’s full name between your Companies House filings and your application can trigger a rejection. Similarly, failing to disclose all “Persons of Significant Control” (owners with >25%) or listing incorrect SIC activity codes will prompt extra checks. Banks expect every detail (company name, registered address, director names) to align perfectly with Companies House or HMRC records.

How to avoid

• Verify that your Companies House registration matches your application form exactly (same spelling of names, addresses, company number, etc.).
• Prepare a single batch of documents for all directors/owners and beneficial owners (UBOs): include each person’s ID and proof of address together.
• Provide a brief business overview or trading plan (with expected customer volumes) to clarify your SIC codes and purpose.

Mistake 2: Weak evidence of business activity

Banks want proof that your business is genuinely trading in the UK. Applications from new companies or sole traders without invoices, contracts, tax registrations or a clear business model often stall. For instance, sole traders typically need to show an HMRC registration letter, a VAT/tax return or a recent invoice to prove trading activity. Without such evidence, banks may view your business as high risk or non-existent.

How to avoid

• Publish a simple website or business landing page describing your products/services and markets.
• Attach draft contracts, invoices, receipts or letters of intent from clients to show prospective or past sales.
• Specify your target market(s) and expected payment volumes so the reviewer understands your model.

Mistake 3: Incomplete KYC and AML disclosures

UK providers must verify all directors, shareholders and beneficial owners, and check sources of funds. Many applications fail because they omit a beneficial owner or don’t submit address proofs for everyone. Remember that every listed director or PSC (>25% owner) must provide a valid photo ID and a recent (within 3 months) UK address proof. Banks also screen all names against sanctions/PEP lists. If you skip any owner or lack clear source-of-funds documentation, the KYC/AML checks will not pass.

How to avoid

• Draw a complete ownership tree showing who owns or controls the company, down to any UBOs.
• Provide notes on source of funds (e.g. investment, revenue) and source of wealth if needed, especially for new or foreign-funded businesses.
• Collect recent proofs of address for all directors/owners (utility bill, bank statement, etc., dated within 3 months) and submit them upfront.

Mistake 4: Choosing providers that do not fit your risk profile

Not all banks accept every industry or geography. Some sectors (gambling, firearms, crypto, adult entertainment, etc.) are high-risk and may be outright banned. Likewise, some UK banks will refuse applicants who reside in certain countries. If your business or its directors fall outside a provider’s policy, your application will be declined. Also, picking the wrong account type (e.g. registering as a sole trader when you should be a limited company) can cause problems.

How to avoid

• Review each provider’s published list of forbidden industries and countries before applying. Only consider those that explicitly accept your sector and your directors’ nationalities.
• Choose an account type that matches your structure and needs. For example, ensure the account supports your expected currencies and payment methods (SEPA, SWIFT, UK Faster Payments/CHAPS).
• Confirm up front whether the bank supports transactions for the countries where your clients and suppliers are based.

Mistake 5: Rushing the application without a pre-submission check

Submitting an application hastily is a common way to create avoidable errors. Even minor typos or omissions will trigger manual review and delays. For example, applicants often forget to fill a field, misspell a name, or skip listing a co-owner – any such inconsistency will cause the application to be held for clarification. Likewise, using an out-of-date utility bill or an ID that doesn’t match the entered name will stall the process.

How to avoid

• Use an internal checklist (or ask a colleague) to verify every detail before submitting. Make sure names, dates of birth, addresses and company numbers are consistent across all forms and documents.
• Double-check that you have uploaded all required documents (IDs, address proofs, company forms).
• In your application or cover note, clearly state the purpose of the account and expected transaction flows so the reviewer has context on your business.

Mistake 6: Ignoring fees, limits, and payment rails during selection

Focusing only on getting an account can blind you to hidden costs and restrictions. Traditional UK banks often charge monthly fees (around £5–£15 or more) and extra fees for certain transfers, whereas many fintechs offer free basic accounts. If you don’t compare these costs, you might face unexpected maintenance charges or FX margins. Also, check whether the account has sufficient transaction limits and supports the payment rails you need. For example, some providers may not offer UK Faster Payments or instant SEPA, which could block your planned business operations.

How to avoid

• Compare the full fee schedules: monthly/annual fees, incoming/outgoing payment charges (for UK local, SEPA, SWIFT), and FX spreads.
• Confirm that SEPA, SWIFT and UK local payments are all supported (and whether faster rails like CHAPS or Instant SEPA are available).
• Check the onboarding timeline against your go-live date. (Many digital banks can open accounts in days, whereas traditional banks often take weeks.)

Fees, limits, and timelines to expect

Notes: “Sends (recommended)” column values are illustrative; actual fees and limits are per Sends’s published pricing. Always confirm the latest details on the provider’s website.

FAQs

Can non-UK residents open a UK business account online?
Yes, but it is more difficult. UK banks do not strictly require UK residency, but many prefer UK-resident directors for compliance ease. Challenger banks like Sends tend to be more flexible and may allow foreign owners (possibly asking for extra documentation). If you and all directors are abroad, check which providers explicitly accept overseas applicants.

What documents are required for onboarding?
Typically you must submit each owner’s government ID (passport or driving licence), a recent proof of address (utility bill, bank statement, etc.), and proof of your company’s registration or business activity. In practice, this means certified IDs and address proofs for all directors/owners, plus your Certificate of Incorporation and (if applicable) partnership agreement or shareholder register.

Why do applications get rejected most often?
The most common reasons are incomplete or incorrect documents and failed KYC checks. For example, an expired or mismatched ID/address proof will be rejected, as will failing to list a required owner. Banks also refuse applications that hit other red flags – e.g. a director on a sanctions list or an unsupported business sector. In many cases, these issues can be fixed by promptly submitting the missing or corrected documents.

How fast can I start sending and receiving payments?
Once your account is approved, you can usually send and receive money immediately. Modern online accounts often activate in under 48 hours after approval. This means you could be trading and making payments (BACS, Faster Payments, SEPA, etc.) within a couple of days of applying. (By contrast, traditional high-street banks may take 1–4 weeks to fully set up a business account.)

Conclusion

In summary, avoid these six pitfalls: mismatched company or director data, weak proof of trading, incomplete KYC disclosures, an ill-fitting provider, a rushed application, and overlooking fees/limits. Each problem is preventable with careful preparation. Before you hit “submit,” double-check all names and addresses against official records, gather thorough proof of your business model and ownership, and pick a banking partner whose fees and payment rails suit your needs. That way, your online business account application will sail through compliance reviews and get you up and running faster.