After setting up a limited company, one of your priorities should be to open a business bank account.
Whilst this is not a legal obligation (a common misconception), it is recommended, as it helps you keep your personal finances separate from your business finances, which will be extremely helpful when it comes to doing your accounts.
You’ll probably come across the acronym ‘IBAN’ when researching different business bank account providers. In this post, we’re going to explain exactly what an IBAN is. Let’s get started.
What is an IBAN?
IBAN stands for ‘International Bank Account Number’.
The purpose of this number is to make sending and receiving money overseas more efficient and secure. As this would suggest, IBANs are relevant to businesses that will be trading internationally or working with people not based in the UK.
The IBAN is a unique identifier for your bank account and comprises of:
- Banking provider information
- Country of bank account
- Sort code
- Account number
Essentially, it is your bank account information standardised into a global format.
How do you use the IBAN?
There are two general scenarios when you will need to use an IBAN:
- If you are receiving money from a person or business outside of the UK, you will need to provide your IBAN (and BIC, more on this shortly) to whoever is making the payment
- If you are sending money to a person or business outside of the UK, you will need to know the IBAN (and again BIC) of the person or business receiving the payment
As this would indicate, notifying someone of your IBAN is completely safe. However, for security reasons, you should send the number independently and not as part of a scan of a document, such as a bank statement.
What does the IBAN look like?
In the UK, the IBAN is made up of 22 characters.
Here’s an example of an IBAN for a UK-based bank account:
GB 12 BUKB 345678 10111213
GB: Country code of the bank account provider
12: These are known as the ‘check digits’ and are allocated by the bank
BUKB: The bank code (BUKB is the code for Barclays)
345678: The sort code
10111213: The bank account number
What is a BIC?
BIC stands for ‘Business Identifier Code’. You may also see this referred to as a SWIFT code (Society for Worldwide Interbank Financial Telecommunication).
The BIC helps international banks ascertain the bank that money is being sent to, like a postcode for a bank.
All banks have their own BIC, and it’s common for a bank to have more than one.
BICs are generally made up of 8 or 11 alphanumeric characters.
Do all countries use it?
The IBAN format is used in the following countries:
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● Albania ● Andorra ● Austria ● Azerbaijan ● Bahrain ● Belarus ● Belgium ● Bosnia and Herzegovina ● Brazil ● Bulgaria ● Costa Rica ● Croatia ● Cyprus ● Czech Republic ● Denmark ● Dominican Republic ● Egypt ● El Salvador ● Estonia ● Faroe Islands ● Finland ● France ● Georgia ● Germany ● Gibraltar ● Greece ● Greenland ● Guatemala ● Holy See (the) ● Hungary ● Iceland ● Iraq ● Ireland ● Israel ● Italy ● Jordan ● Kazakhstan ● Kosovo ● Kuwait ● Latvia |
● Lebanon ● Libya ● Liechtenstein ● Lithuania ● Luxembourg ● Malta ● Mauritania ● Mauritius ● Moldova ● Monaco ● Montenegro ● Netherlands ● North Macedonia ● Norway ● Pakistan ● Palestine ● Poland ● Portugal ● Qatar ● Romania ● Saint Lucia ● San Marino ● Sao Tome and Principe ● Saudi Arabia ● Serbia ● Seychelles ● Slovak Republic ● Slovenia ● Spain ● Sudan ● Sweden ● Switzerland ● Timor-Leste ● Tunisia ● Turkey ● Ukraine ● United Arab Emirates ● United Kingdom ● Virgin Islands British
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Whilst IBAN is not the standard in North America, Australia, or New Zealand – it is recognised, so payments can be made using it.
Do all banking providers issue an IBAN?
No. If you are in the process of looking for a business bank account and will require an IBAN, we recommend checking with the provider before you start the account opening process.
Some services allow you to calculate your own IBAN, but the reliability of this method is still in question.
How to find your IBAN (and your bank’s BIC)
If you have been issued with an IBAN, you find this on your bank statement. If you use online banking, you will also be able to locate this from your online banking portal.
The same methods can be used to find your bank’s BIC.
We can help you open a business bank account
All of our company formation packages come with the facility to opt-in to one of our business banking partners during the company formation process. Whilst the exact banking options that you see during the process can differ, we work with the following business banking providers:
Simply choose the service that you’re interested in, and we’ll then email you more information about the online account opening process.
Already formed your company with 1st Formations? Not a problem. You can still take advantage of our business banking options. All you need to do is:
- Log in to your Online Company Manager
- Select ‘My Companies’
- Click on your company name
- Select the ‘Getting Started’ tab
- You will be presented with a list of available banks – click ‘Add To Cart’ next to the account that you’re interested in
- Complete the checkout process (no payment is required)
- You will then receive an email with more information
So there you have it
The IBAN (or International Bank Account Number) makes the sending and receiving of money overseas more efficient and secure.
We hope you have found this post helpful. Please leave a comment if you have any questions.
Thanks for reading.
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