Most people have a personal bank account and throughout the year it enables you to conduct a range of monetary transactions on-line or in person at the bank. When you make the leap from being employed to being self-employed, you need to decide whether you wish to use the same personal bank account for your business.
As a sole trader, the easiest thing to do is to have a separate account when running your business. You may not be aware, but you may be breaking the terms and conditions of your bank account if you choose to have both your business and personal transactions going through the same account.
If you are building a business or testing the market on either Amazon or E-bay consider reading my blog - Are you running a business or is it a hobby?, as this will clarify when a hobby becomes a business.
If you are considering starting up a partnership, then a separate bank account would be encouraged for tax purposes.
As a limited company you would need to have a separate business bank account simply because, as a limited company you are a separate legal entity to the business.
Advantages to setting up a business account:
- You may be able to off-set any bank charges and interest paid by the bank as a business expense;
- By having a separate business bank account to your personal bank account it makes it easier to keep track of your finances;
- It will help when calculating your end of year accounts;
- It provides up-to-date and accurate business income and expenditure data.
If you are planning to open up an account for your business, do your research and shop around for an account that suits your needs and the needs of your business. Also, keep an eye on bank charges.
A lot of discipline is required to maintain accurate records, to reconcile accounts on a regular basis and to put aside enough funds to pay your tax bill. Consider setting aside a proportion of your income in a separate saving account to pay your tax and your accountant at the end of the year.
Business Online Banking gives you direct access to your business account(s) via the internet and offers a range of online banking services. It is a stable, durable and secure system that will provide you with a fast online experience.