Even if you’re a sole trader and not a limited company you still need a separate business bank account. Here are some compelling reasons why.
- As soon as you get your personal finances mixed up with your business it will be difficult to keep an eye on how the business is actually doing.
- It’s hard to be disciplined about your business finances if you start to pay for personal stuff through this account. I suggest that you agree an amount you will take out of the business account each week or month and transfer it into your personal account.
- When your accountant comes to prepare your accounts it will take them more time to trawl through your business bank and sort out what’s for business and what’s for personal.
- If the tax authorities start an investigation into your business and it contains a lot of personal transactions they will want to see your personal bank account too. Can you remember why you deposited that money into your personal account a year or so ago? Those are the sorts of questions you will have to answer as they pore through your personal and business accounts.
- You will take your business more seriously when you have an account for your business.
If you’re worried about bank charges, don’t be! Most banks will give you at least a year of free banking when you start your business. Not only that, there are a few challenger banks out there where the banking is free like Starling and Revolut. Read the small print in case your particular circumstances don’t apply!!