Are you debating whether you need a business account or not? With an increasing amount of people becoming self-employed, the question has been increasingly asked. In this article, we will determine what a business bank account is, who needs one and what the pros and cons are of having one.
What is a business bank account?
A business bank account is a bank account that is separate from your personal one and is used for business purposes only. If you’re thinking of having employees, you can run payroll with a business bank account. Is there anything else a business account can do that a personal one can’t?
When do I need a business bank account?
If you have a business that is registered with the Companies House (e.g. a limited company), you will need a business bank account. This is because the identity of the business is separate from your own. This means that the business is legally separate from you and, therefore, you shouldn’t be using a personal bank account to manage your business.
If you’re a sole trader, freelancer, or contracting not through a limited company, it’s not a necessity to have a business account. . This doesn’t mean you’re not entitled to one – it just means that you legally don’t need one because your business is of which the same identity as you.
The pros of having a business bank account
Having a business bank account can lead to easier management of your business’ funds. This means that you won’t have to worry about what was a business expense and not, which is confusing when it’s in your personal account. Having a business account will also save you some time, as you won’t have to sift through this information. Not only that, you won’t be breaking any of your bank’s terms and conditions.
The cons of having a business bank account
While you save time in some aspects, you may lose time in others. This is because the admin is doubled, which means you now have to look after two accounts. As well as that, your bank may charge you for having a business account. These fees may not be a lot; however, you may still lose some money.
Overall, having a business account is only necessary when your business has its own identity; however, that doesn’t mean you can’t have one. There are numerous positives to having a business account, as well as drawbacks. If you’re still unsure if you need a business bank account, or find you need extra help with your finances, contact us today or visit our services page for more information on the services we offer.