If you operate your business as a limited company, you should have a separate business bank account. But if you’re a sole trader then although you’re not obliged to have a separate bank account, it’s worth considering opening one for the following reasons:
- Keeping your personal and business expenditure separate makes it easier to identify all your business expenses – this is important because if any business costs are missed, your profit will appear higher and you’ll pay more tax
- It will save time as you won’t need to go through your statements to split out your business and personal transactions
- Your bookkeeper will usually ask for a copy of your bank statement to check that your bank balance and the balance in your accounting software agree – by having separate business and personal bank accounts, they won’t need to see what you spend your personal money on
- From a customer’s perspective, it looks more professional if your business banking is separate from your personal banking
- Merchant services (such as being able to accept card payments and Direct Debits) are often easier to access with a business account
- You may even wish to open a second business account so that you can set money aside for your tax bill or VAT payments
Although there is often a small monthly fee associated with a business bank accounts, many banks offer a fee-free period at the start, and some don’t charge at all!