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When you’re running a small business, every penny counts — and managing your finances wisely is essential for long-term success. While most business owners rely on business credit cards for day-to-day spending, fewer take advantage of business savings accounts — a powerful tool for growing your surplus cash while keeping it safe and accessible. In this guide, we’ll break down what business savings accounts are, how they work, and how they can help support your business’s financial health.
What is a business savings account?
At its core, a business savings account is exactly what it sounds like: an account designed specifically for businesses to save money, earn interest, and manage financial reserves separately from operational cash flow.
Unlike personal savings accounts, business savings accounts are tailored to the needs of companies. This usually includes features like higher deposit limits and easier integration with accounting software.
Do I need a business savings account?
While not mandatory, it’s a smart move for any business that wants to separate spending from saving and earn interest on unused funds. It’s particularly helpful if your business experiences seasonal highs and lows, holds cash for tax payments, or wants to set aside money for future investments.
If you’re unsure how to choose the right type, keep reading — we’ll walk you through the options.
What to do with business savings
Your business savings aren’t just there to sit idle — they’re a valuable resource that can support stability and fuel growth when used strategically. Here are some common and effective ways businesses put their savings to work:
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Cover tax obligations like VAT or corporation tax.
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Invest in new equipment or upgrade existing tools.
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Hire new staff or support payroll during busy periods.
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Fund expansion into new markets or product lines.
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Create a financial buffer for seasonal dips or unexpected costs.
By keeping these funds separate and purposeful, you’ll give your business the flexibility to act quickly and confidently when opportunities or challenges arise.
How do business savings accounts work?
Business savings accounts come in a few different types, each designed to suit different savings habits and business needs. The right one for you depends on how frequently you’ll need to access your funds, and how much flexibility you want.
Easy Access Savings Accounts
Easy, or instant, access accounts let you withdraw money whenever you need to, with no penalties or waiting periods. This makes them a great choice for businesses that want to keep cash within reach — whether it’s to cover short-term expenses, handle unexpected costs, or simply stay agile. While they tend to offer lower interest rates than fixed-term options, the trade-off is maximum flexibility without locking your money away. The Capital on Tap Instant Savings account, powered by ClearBank, offers a 3.74% AER* (variable), instant access, and no maintenance fees!
Fixed-Term Savings Accounts
These accounts require you to commit your funds for a set period — often six months, a year, or longer. In return, you usually earn a higher rate of interest. This makes them well suited for businesses with predictable cash flow that can afford to set aside money without touching it. However, early withdrawals may not be allowed, or could come with penalties, so they’re less ideal for managing day-to-day needs.
Notice Savings Accounts
Notice accounts offer a middle ground. You can withdraw funds, but only after giving advance notice — typically 30, 60, or 90 days. Because of this balance between access and commitment, they tend to offer better interest rates than easy access accounts, but require a bit more planning. They work well if you have larger savings goals in mind and can wait a little before moving your money.
Choosing the right savings account for your business
When deciding which account is right for your business, consider how quickly you may need access to your funds. If flexibility is your top priority, an easy access account gives you immediate control — but usually at a lower interest rate. If you can afford to set money aside without needing to touch it, a fixed-term or notice account could help you earn more.
Also, consider the minimum deposit requirements, fees, and whether the interest is calculated daily, monthly, or annually — as these can affect your overall return. If you need more help understanding interest rates and how they work, check out our blog on AER.
Are business savings accounts worth it?
Business savings accounts can absolutely be worth it — especially if the alternative is your money sitting idle in a current account earning no interest. They offer a low-risk way to grow your extra cash and support smarter money management. Here’s why they can be a great addition to your financial toolkit:
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Return on investment: Even small amounts of interest can add up over time — especially with compound interest helping your savings grow faster the longer you leave them untouched.
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Opportunity cost: By choosing the right type of account, you can strike a balance between earning more interest and still having access to your money when you need it.
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Long-term planning: A dedicated savings account helps you prepare for big expenses like tax bills, new hires, or equipment upgrades — giving your business more flexibility and financial confidence.
The bottom line
A business savings account isn't just a nice-to-have — it's a practical tool to protect and grow your finances. Whether you're looking to set aside money for tax, boost your emergency fund, or earn a little extra interest, a savings account can help your business stay agile and financially secure.
Before opening one, compare the options and think about your cash flow needs. The right account can help your business go further — without lifting a finger. If you're a small business owner looking for flexibility and competitive returns, the Capital on Tap Instant Access Savings account, powered by ClearBank, is designed with you in mind. You can get started with as little as £1, earn our full 3.74% AER* (variable) on every pound, and withdraw funds anytime — with no penalties, no monthly fees, and no upper limit. Apply now to start growing your savings.
FAQs
Can a business have a savings account?
Yes, and it’s a recommended practice for managing financial health.
How much should I have in my business savings account?
Aim for three to six months of operating expenses, but this can vary depending on your industry and risk tolerance.
When would a business need a savings account?
Anytime your business has surplus cash, or if you're preparing for tax season, growth plans, or unexpected costs.
Are business accounts taxed?
In short, yes, but the exact amount will depend on your business structure and how much money you earn. Check out our full guide on business savings taxes for more general information. For personalised tax guidance specific to your business needs, please consult a qualified accountant or financial advisor.
This does not constitute financial advice. Please consult an accountant or financial advisor if you would like more information.
* based on today’s Bank of England base rate. Changes to the Bank of England base rate could mean that the rate offered when you apply is different.
The Annual Equivalent Rate (AER) demonstrates what you would earn in compounded interest on savings over 12 months, as a percentage.
