Separate bank account for "business"

debbie42

I've just started working as a (part-time) self employed freelancer. My accountant has said that, theoretically, I don't need a separate business bank account, but that it could make the book keeping easier. That seems like a good enough reason to get one!

If I get a current account specifically for business purposes, then it wouldn't have many transactions each month. What I don't really understand is what differentiates a "business" account from a normal current account? Do I really need a business account, or could I just get a second current account?

Also, if anyone can recommend a good business bank account then that would be appreciated.

midge61

Hi

My hubby has just registered self employed and went to the bank yesterday. He has been given a business account for sole traders which is free for 18mth and then the charges are a lot less than a full business account. This was Nat west

Hope this helps

debbie42

Hi,

Thanks for that. I've looked at NatWest and Lloyds, and they both have a free introductory offer, which is great, but then they charge for things like paying money in. I was wondering why I couldn't have a "normal" current account and get all this for free anyway, with the low level of transactions I'm expecting?

sexystephsmith

Since you are not setting up as a Ltd company you can just open a seperate, normal current account to use for your business transactions

jexygirl

Buisness bank accounts charge you even if you do the work (well ours does, and our previous one did). Everything from paying in cash, internet banking when we transfer wages to people or to pay bills, cashing cheques etc. They charge us.

I would say if its simply to put your buisness money through, ie. all your invoices are paid into and from it, same with expenses, and you dont need any other buisness services, then I see no reason not to have a normal bank account, and can see why your accountant has suggested it, as you can see exactly whats going in and coming out expense wise, and dont have to troll through personal stuff with your personal bank account.

Years ago when I was selling stuff on ebay (I didnt have a buisness then and was working as well as selling junk!) I had a seperate bank which all ebay payments went into and all post costs etc came out of, only because it was the holiday fund! I guess this is a similar thing that makes it easier to run your freelance finances.
good luck

paulwf

OP please read the "sticky" on business bank accounts.

Banks charge for business banking because they can. Where they become useful is when you need to set up a staff pension scheme, link a credit and debit card to it, have a savings account attached to it so you can put money by for VAT or rent, transfer money from a loan account, appoint other account users such as your manager or book keeper...none of which applies to you but it's useful to know what they're designed for. The only reason we get free personal banking in the UK is because of excessive penalty charges as anyone who follows Martin Lewis' news will know.

You can get some free accounts, such as Santender (was Abbey) or if you are a member of the FSB there is the Cooperative. Santender is designed for non-cash businesses and doesn't have the best of reputations, and the Cooperative don't have many branches so makes paying in money difficult in some cases.

You could use a free personal account but if they catch you using it for business they'll want you to switch. Something to remember is that if you have a proper paper trail and are organised you can take money in cash and pay out expenses in cash saving you money both when paying in and drawing out.

DKLS

I use cater allen for all my business banking, they are a part of Santander and are ideal for me as I dont do any cash handling.

midge61

Just to say when hubby went to the bank they said that they were giving him a business account especially for sole traders that does not incur the same sort of charges as a full business account.
They also said if you need to use a trading name they won't allow it to be a ordinary current account.

ukbill69

Get a separate bank account. It will help and you dont want your book keeper or accountant seeing your personal stuff do you?

paulofessex

Paying cash into a sole trader / business account is one of the highest fee charges l believe. So if your likely to handle alot of cash l would suggest have a good look round

ukbill69

and using a personal accounts for business breaches a lot of banks terms.