Should I have a business bank account?
This is a question I get asked a lot and the answer is always yes! Here’s why!
By law as a sole trader you don’t have to have a business bank account as your finances belong to you. If you’re a limited company, then by law you must have a business bank account as the money belongs to the business and not yourself. Therefore, you must keep personal and business finances separate.
The good thing about keeping your business and personal finances separate means there is no confusion when it comes to your spending. Everything in your business account is strictly for business and everything in your personal account is for personal use. This makes it much easier to reconcile your accounts. Whether you’re doing your bookkeeping yourself or you have a bookkeeper looking after your finances it will mean much less work for you keeping it all separate.
You may also find that your bank’s terms and conditions specify that your personal account must not be used for business use. So, make sure you check as they have the right to close your account at any time and without notice if they think you are in breach of their terms and conditions.
By having a business account for your business, it means you will build a credit rating for the business. This will come in handy if you need financial support further down the line or require grants or investments.
To open a business account your bank may charge you fees, but they should be very minimal. Make sure you shop around for the best rates. It’s worth paying the small fee to keep your personal and business finances separate and it also shows your clients that you are professional and reputable by having a dedicated business account.
Making the right choices when it comes to your business finances can make a huge difference to your business success.
Sue Haynes is the founder of Cactus Bookkeeping and helps business owners
with all aspects of Bookkeeping to save them time so they can concentrate on running their
business. Sue is licensed, regulated and supported by the Institute of Certified Bookkeepers (ICB)