Choose and manage a business bank account
Advantages of having a business bank account
If you operate your business as a limited company or partnership, you are required to set up a business bank account to ensure you report your taxes correctly.
If you are operating as a sole trader, there is no legal requirement to have a business bank account. However, you may find it easier to keep your business and personal finances separate.
Setting up a business bank account has several advantages:
- Your personal bank account terms and conditions - Some banks won't allow you to use your personal bank account for business transactions, this will be included in the terms of your bank account.
- Tax reporting to HMRC - You are required to file a tax return every year and to do this you'll need to keep records of your business's sales and expenses. If you're using a personal bank account, your business transactions will be mixed up with your personal transactions. This can make the process complicated - having a dedicated business account makes it easier to track business cashflow and complete your tax return.
- Professionalism - Providing customers and suppliers with a dedicated business bank account can make your business look more professional than using personal bank details.
- Business account benefits - Many banks will offer introductory offers on business accounts, meaning that you can get free banking for a certain timeframe. Some banks will also provide free or low cost electronic transactions, branch based advisers and competitive interest rates on business profits.
UK Finance provide further guidance on opening a business bank account.