Do I need a business bank account?

TSLuc

MSE article 28th June 2021 "Do I need a business bank account?" by Helen Saxon says that you don't need to have a business bank account if you are a sole trader. 
My bank (Lloyds )T&C say "Without our consent you must not open or use a personal account ... for the purpose of a business" but were not clear on what to do. Other personal bank accounts I have looked at state not for business use. 

It maybe legal to use a personal bank account as a sole trader but does any bank's T&Cs allow you to so?

Has anyone successfully got permission to use personal account for business use as sole trader.

MSE could you investigate - I'm sure I'm not the only one who who like to know this.   

MattMattMattUK

Some people might have, but it will be rare, banks like things tidy, organised and separate. As someone who runs a business, why would you not want a business bank account?

MalMonroe

I think it is crystal clear from what Helen says.

Firstly, "There's a pretty easy line here and it relates to whether your business is legally separate from you."

And this "As a rule of thumb, if you're offsetting business expenses (eg, travel tickets, phone calls or stationery) against your income, then you really should be looking for a separate business account."

Do have another read of the article.

I know someone who has been a freelancer for years without having a business account. He never thought to ask his bank and has never had any problem. He pays all his tax and national insurance and nobody has said anything about it.

But even if you DID have to open a separate account - and if you read the article further, it seems that you can do if you wish - it isn't a big deal, is it?

MalMonroe

P.S. I've reported the bitcoin comment! Please feel free to also report it. 

Babbien

Literally just joined this forum and literally just opened a new business account a few hours ago.
 
I opened a limited company in the end but even for a sole trader I was always planning on getting a new business bank account. 
It just makes things easier and separate from my personal transactions (and less complicated when you need to send everything to the accountant) - plus more official as it is in the business name.

I guess the other question I'd have is why wouldn't you open a business bank account? I was originally concerned about the additional costs involved but there are plenty of business accounts now that are free or very nearly free to run and they include extra functionality like invoicing and integration with software which some businesses might find useful.

Mistral001

I have been using my personal bank account for my business for the past 24 years without any complaints from my bank.  They have always known that i run a full-time business.  However, I have only one or two business transactions every month because of the nature of my business.  I very much doubt if my bank would be happy if I had dozens of business transaction per month.

Mistral001

MattMattMattUK said:

Some people might have, but it will be rare, banks like things tidy, organised and separate. As someone who runs a business, why would you not want a business bank account?

1. Additional cost
2. An additional bank account can create an extra layer of administration.  
3. You might want to emphasize your sole trader status and hence the fact that your liability to your clients/customers/suppliers is not limited.  

Pennywise

When MTD (Making tax digital) comes into full force in April 2023, those with bank accounts mixing personal and business transactions will have a lot more work to do.  Most people will be linking their bank account with accounting software (live bank feeds etc), and will have to spend time "explaining" or "allocating" all the private transactions to drawings.

If they have different bank accounts separating business and personal, their book-keeping/accounting will be a lot easier.

As for bank charges, some banks are offering book-keeping/tax return software as a freebie as part of the business bank account, i.e. Nat West offer FreeAgent software for free.  So you may pay a small amount in bank charges, but save spending money on the soon to be essential software.

donemedosh

I work as a sole trader & I have a normal personal current account for the business on the advice of my accountant. But we have a seperate account for our personal accounting. I have had the business 12 years & the bank has never questioned me about it. If you are a limited company then I think you need business accounts

J_B

donemedosh said:

I work as a sole trader & I have a normal personal current account for the business on the advice of my accountant. But we have a seperate account for our personal accounting. I have had the business 12 years & the bank has never questioned me about it. If you are a limited company then I think you need business accounts

We are in the same boat - we have a Ltd Co with a business a/c but also several small 'businesses' with a private bank account for each.