Sole Trader - Ditching My Business Account?

staffsuk

Hi all

I'm a sole trader and have separate business (Co-op) and personal (Santander) accounts. I'm wondering if I really need to have a business account. I know there is no legal obligation for a sole trader to have a separate business account but it does make for easier bookkeeping.

Currently I have on average just 10 transactions per month going through the business account - mostly payments in from PayPal and drawings to my personal account with the odd card payment & D/D. I can't ever recall a time I've had to pay cash into the account. I'm left wondering why I'm paying the service charges (around £6/month) and having to keep the balance above £1000 for the privilege.

I know many banks T&C's expressly forbid personal account use for businesses - but with such low transaction numbers and my being a sole trader would it really be a problem?

Or does anyone know of a fee-free business or personal account which can be used by a sole trader with few transactions such as myself? My business name is my name so any cheques (very very rare) would be in my name.

Neil_Jones

The T&Cs for your personal Santander account (and probably most other banks) will say its not to be used for business purposes regardless.

Most business banking attracts monthly fees regardless of whether you feed it two transactions a month or two thousand. You can always switch it around providers, most of them provide 12/18/25 months free banking plus of course the monthly fee you can put through as an expense when it comes to self assessment (but you probably already knew that )

That being said there is probably no real need to have a business bank account at all if you can keep track of everything offline yourself...

mt99

I suppose the main risk of putting business transactions through your personal account is the bank suddenly one day and without warning freezes your personal account and when you ring them up they tell you they are closing it because you've broken the terms and conditions

it has happened quite a few times before so it's not something you want to happen

JuicyJesus

If you're a switcher, a lot of banks will give you another period of free banking.

alanq

Metro bank offers business banking which is free for up to 50 transactions per month provided a minimum balance of £5000 is kept in the account.

https://www.metrobankonline.co.uk/business/everyday-banking/products/current-accounts/business-bank-account/

However, see proof of identity requirements.

https://www.metrobankonline.co.uk/business/everyday-banking/needsbased/what-you-need-to-open-a-business-account/

BatchedMetting

I got a year or two free business banking from Natwest so maybe switch?

staffsuk

Thanks all - I decided to go with Yorkshire Bank who are offering 25 months free banking to switchers who have been in business for longer than 12 months - sorted!

Layla_B

I've spent the last 3 hours calling banks, trying to find one that will permit use of a personal current account for sole trading - nada! Did you ever find a bank that would permit this?

staffsuk

Layla_B wrote: »

I've spent the last 3 hours calling banks, trying to find one that will permit use of a personal current account for sole trading - nada! Did you ever find a bank that would permit this?

I didn't - but to be honest even with a very low transaction volume like mine it makes much more sense to have a separate account for your business. Separating all of the transactions out from a personal account and having to keep a separate running balance is a complete pain. Also if you are ever required to present your accounts as I was once before it makes things much easier, transparent & a lot less stressful. Goes without saying it makes bookkeeping a lot easier too :-)

Plenty of banks will offer free business banking for up to two years to new businesses & sole traders. A few also offer free banking to established businesses who are looking to switch.

TonyMMM

As a sole trader I had a Nat-West business account which became v expensive once the initial free period ran out - I had a joint Santander 123 account for personal use and my Santander branch staff advised me to just open another 123 account in my sole name and use that for my business transactions ....earned a lot of interest through it over the last few years !