Starling Bank has made waves within the UK banking sector since its formation in 2014 and first receiving their UK banking license in 2016. As a Fintech ‘challenger’ bank, their aim is to bring modern technology into the banking system. To quote CEO Anne Boden:
The reason Starling keeps powering on is that we don’t think like a bank. As per my original pitch, we are a technology company. Today, banking is seen as a tech business. Starling has played a huge part in making that happen.
Whilst Starling Bank’s most known product is their personal account, they have also made great strides in the last few years with their business focused product. As of 2021, out of 2 million accounts, 300,000 of these are business accounts.
Starling Bank is a fully licensed UK bank, and customer deposits are therefore insured up to a maximum of £85,000 per business under the Financial Services Compensation Scheme (FSCS).
Starling Bank were the winner of the best British Business Bank Account award in both 2019 and 2020 – so let’s dig deeper and see what all the fuss is about.
What is the Starling Bank Business Account?
Starling Bank is a smartphone app focused Fintech start-up bank. They aim to offer simple and modern technology products that allow the user to simplify their banking, with a transparent cost structure.
The Starling Bank Business account is essentially built on the same foundations of their very successful personal account. However, they have added various features that should allow businesses to simplify their banking.
How does the Starling Bank Business Account work?
Whilst the Starling Bank Business account is free, for £7 per month you can sign up for the business toolkit – which contains the following features:
Send invoices directly from your account by connecting to your email from the app.
Separate expenses into categories.
Mainly for sole traders, this function analyses your account and estimates the taxes due.
Record & Submit VAT
Automate the VAT calculations to give a running total of the VAT position.
Upload bills and schedule payments.
To Do List
Keep an ongoing list of tasks such as VAT & tax payments, so you can easily see when deadlines are looming.
Currently the business toolkit is only available to be used via the computer on the Starling Bank websites and cannot be used on the smartphone app.
Accounting Software Integration
You can automatically connect your Starling Bank account to your accounting software if you use Xero, Quickbooks or FreeAgent.
In addition to the business specific areas above, the Starling Bank business bank account has some similar features to the personal account, such as:
Business Spending Insights
Analytics of the spending of your business over time.
Separate areas within your bank account where you can keep funds for different reasons. For example, for upcoming tax payments or VAT.
Who is the Starling Bank Business Account for?
Your writer is someone who has dealt with various UK banks for business within the UK for the last 20 years or so. This experience has been at times incredibly frustrating, and even in 2021 – the processes and technology can sometimes seem to have been developed in the 19th century, let alone the 20th! From incredibly over complicated and unreliable security systems, to online banking platforms that require a 2-hour video conference call with the bank to learn, it becomes very clear sometimes just how old these banks are.
They have processes built upon processes, technology built upon technology. It gets to the point where these processes and the way they interact becomes so complicated that it effects the customer experience and makes banking a headache.
Therefore, the advantages that Starling Bank, and other challenger Fintechs such as Monzo, Revolut and Tide have, is that they don’t have all this baggage. They have built their systems up from scratch very recently, so they can focus on the user experience and efficiency of their systems.
Therefore, Starling Bank is definitely a good option for people who have experienced the difficulties with the old-school banks and want to try something that may suit a modern business life better.
There are some reasons it may not be for you however. If your business has to deal a lot with cash, then it is possible that Starling is not the best option, as Starling do not have branches. Therefore, any cash has to be paid in via the post office and incurs costs, so this could become expensive over time.
In addition, if the business is on the larger side, then it may be preferable to keep a large proportion of the money within a traditional high street bank, as if there is an issue, and the account is frozen, then at least you can go to a branch and talk to someone – something that is definitely not an option with Starling Bank!
Are you a sole trader? Check out our article comparing the banking options, and see how Starling Bank ranks.
How to use the Starling Bank Business Account
To sign up for a Starling Bank Business account, as with any business bank account, you will need to provide certain documentation to set up the bank account. You will first need to download the app on your phone, and go through the simple set up process. You will then need to confirm your identity so you will need a personal ID. Then, Starling Bank will need to get more information on your business – so will ask for certain documents such as:
- Bank statements
- Accountant’s letters
- Signed agreements/contracts
As Starling Bank is a smartphone app focused bank, the majority of your banking functions can be done on your phone. However, Starling launched their website in 2020 which allows business customers to also do their banking on a computer. This may allow you to perform more complex or involved processes more easily. Currently the Business Toolkit is only available to use on a desktop.
How much does the Starling Bank Business Account cost?
Business banking generally incurs more costs than a personal bank account. The basic business bank account with Starling Bank is free. However, there are costs for certain add-ons and processes:
|Business Toolkit||£7 per month|
|EUR Account||£2 per month|
|USD Account||£5 per month|
|Sending money within the UK via CHAPS||£20 per transaction|
|International Payments||0.4% of the amount plus £5.50 fee for Swift payments|
|Cash Deposits via Post Office||up to £1,000 – the cost is £3. If over £1,000, then 0.3% of the amount deposited|
Is Starling Bank safe?
As a licensed bank, Starling is covered by the Financial Services Compensation (FSFC). This means that business with an account is insured up to a maximum of £85,000 per financial institution so that much is covered if the institution fails. This means your money has the same level of protection as it would have with any UK high street bank.
Starling Bank also received the highest score in an assessment of UK bank security in 2021:
Starling Bank is a smartphone app focused bank – which means that their security systems are very much based around interaction with a phone. This means that not only do they not need extra hardware devices to login to online banking or make payments, but also that security is easier – as the app on the phone can be used to add extra layers of security such as SMS or ID via the app, which adds well rounded security features to the account.
Starling Bank Business Account reviews – what are people saying?
On Trustpilot Starling Bank have a rating of 4.4 out of 5 from over 21,000 reviews. Unfortunately, it is not possible to split out the Trustpilot reviews for Starling personal and business accounts. However, 8% of the reviews are 1 out of 5 stars and rated ‘bad’. From looking through these it appears that a large proportion of these reviews concern the business account. The main complaints concern:
- Freezing accounts and holding the money
- Requiring a huge amount of documentation to open a business account
- Turning down applications for sole trader accounts with no reason why
- Can be very difficult to get through to customer services.
Starling Bank Alternatives
Starling for Business Pros & Cons
Starling Bank can now since October 2020 also be used on computers as well as via the smartphone app, so suits users who prefer to do their business banking on a desktop.
Simple system that is built from scratch rather than on years of legacy banking systems.
Very useful for small companies and sole traders.
Not suitable for businesses who need to pay in cash regularly.
If you want to do all your banking on your smartphone, this may not work for you as the Business Toolkit can currently only be used on the desktop version of the website.
Larger businesses who have a dedicated bookkeeper may not require the financial management tools they offer.
In its short lifespan, the Starling Bank business account has been showered with accolades like best business account in the UK and as safest bank in the UK. The high praise seems justified by their simple and clear product, that stays focused on the core banking functions that any business needs. Some businesses may require some of the extra functions that an older high street bank can offer, and Starling Bank will not work well for cash focused businesses. However, for a large proportion of sole traders and businesses who are looking for a modern and easy to use bank for their trading, Starling Bank is definitely one to look at.