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Do I need a business bank account?

Discussion in 'Accounts & Finance' started by DavidGiant, Dec 7, 2010.

  1. DavidGiant

    DavidGiant UKBF Newcomer Free Member

    Posts: 54 Likes: 7
    I know the importance of keeping business and personal accounts separate. However, does a sole trader really need a business account or can they use a personal account solely for business use?

    My thinking is as follows about a business account.

    1. You have to pay for a business back account, personal accounts are free
    2. You pay for business transactions like cheques and cash deposits. I take none of these, I only take one or two large payments a month direct to my account
    3. You have access to a business manager. I work in a specialised IT field and do not need a business manager
    4. You have access to funding and overdrafts. The day I require such a thing is the beginning of the end for my little business

    Business banking undoubtedly has a use and if I ever grow my business it would be essential. However, currently I have no use for it and I resent paying a fee for a service which I do not require.
    Last edited: Dec 7, 2010
  2. mlc2009

    mlc2009 UKBF Newcomer Free Member

    Posts: 63 Likes: 2
    I work In IT too and I also don't need any of them things, but I still have a business bank account. I find it easier for tax purposes to keep personal and business transactions separate. Also, some banks won't let you use a personal account for business transactions. A lot of business bank accounts are free for a few years, and then the costs only incur when you want to pay transfers etc
  3. Esk247

    Esk247 UKBF Regular Free Member

    Posts: 7,750 Likes: 1,511
    You can get the first year of a business bank account free just like a personal account.

    It's just easier to set your stall out and have a business account from the off. Saves any complications further down the line with your bank or your business, it's also more professional when people can make cheques or payments direct to a company rather than an individual.
  4. MyAccountantOnline

    MyAccountantOnline UKBF Regular Full Member

    Posts: 9,245 Likes: 1,829
    Subject to your banks terms and conditions I cant see any advantage to you using a business account - assuming you never receive cheques in your trading/business name which is different to your own name.

    I have many clients who are in similar positions who just use a second private account solely for business.
  5. elainec100@cheapaccounting

    elainec100@cheapaccounting UKBF Regular Full Member

    Posts: 13,271 Likes: 2,870
    Santander give free business banking but as a sole trader, as long as you manage your accounts well, then there is no need for a separate bank account.

    For a limited company you should have a separate account.

    Word of caution - if there is no business account then HMRC can ask to see your bank statements for the business transactions i.e. they get to see your personal account.

    Just be aware that it could (and I say could) happen.
  6. Giggleberries

    Giggleberries UKBF Newcomer Full Member

    Posts: 92 Likes: 12
    It makes things a whole lot easier and you can get some good business account deals if you shop around.

    This Money site may be useful for you and also the Small Business Pro site
  7. talkinpeace

    talkinpeace UKBF Regular Free Member

    Posts: 875 Likes: 140
    I've never had a business account.
    My trading name is my name.
    I mark up my bank statement each month with business / personal.
    Smile know full well that I'm self employed - they looked at the income into the account as proof of turnover for a mortgage.
    I'm pathologically organised.
    And unlike some of my clients do not buy "interesting" items on my debit card!
  8. MyAccountantOnline

    MyAccountantOnline UKBF Regular Full Member

    Posts: 9,245 Likes: 1,829
    Its interesting to note these are the conditions shown on Smiles current accounts -

    1. Your account

    1.3 You can only use your account as a personal account. You must not use it as a club, charity, sole trader,
    company, partnership or other kind of business account or for any business purposes

    In reality as you say they are clearly fully aware of it and I've never actually seen a bank close a personal account used for business purposes.
  9. Esk247

    Esk247 UKBF Regular Free Member

    Posts: 7,750 Likes: 1,511
    I've seen a bank switch a personal account in to a business account though..and vice versa :eek:

    Just tread carefully, you're breaking the banks own rules so they could swiftly ask you to change your account or create a business account.

    You still get a year free so it's not really that much of a problem and if you're only banking a few cheques a year it doesn't cost much at all. Something like 30p a cheque. Which is nothing if you're getting large chunky cheques through the post every 3 months.
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