New Personal Bank Account for my sole trader business

TrickyNicky

Hi, just looking for advice re opening a new bank account (not switching) as I have started a small business to top up my pension. I have also been doing some shifts back in the NHS to help with Covid. It would be good to have all my additional and business income and expenditure in one place for Tax purposes.  I have made a loss so far with purchasing equipment etc. (using personal savings to keep account in profit), so it wasn't worth having a separate account until I start making some money!!  Covid hasn't helped. I'm pretty sure I don't need a business account. I already have a joint account and a personal account with Nationwide and thought it best to go elsewhere (i.e. don't put all eggs in same basket).  I cannot guarantee a specific amount into the account each month as I am still just getting known and having new business come my way.  I'm also not wanting full time work, after all I am supposed to be retired!!  I just need something to do that interests me and brings in a bit of cash each month.  Any thoughts on who to switch to or whether I am best trying to muddle on using my present personal account for a bit longer, until I am more established.  Thanks for any thoughts or advice.

Daliah

If it's a business, you should really have a business account as using a personal current account is against the T&Cs of essentially all banks. There are countless cases where people report they had their personal current accounts closed because they used them for business purposes.

You can get free of charge sole trader accounts at Starling Bank or Monzo Bank. High Street Banks sometimes offer 12 months free, and then start charging. There have also recently been unconfirmed claims by people that Halifax do allow personal current accounts to be used for business purposes. You would have to get formal confirmation, in writing, from Halifax if you want to consider them.

TrickyNicky

Daliah, thank you for this information. I had read various articles and information on Money Savings Expert regarding whether I needed a business account.  It states as I am not a limited company I don't have to have one but am aware some banks are not happy if I use a personal account. I'm not having large sums of money coming in and out and will be pleased if I make  £4-£5,000 a year.  I'll have a look at Starling Bank or Monzo though, and possibly Halifax to see what options I have.  Thanks for taking the time to reply.

eskbanker

TrickyNicky said:

I had read various articles and information on Money Savings Expert regarding whether I needed a business account.  It states as I am not a limited company I don't have to have one but am aware some banks are not happy if I use a personal account.

It's dangerous to rely on such articles - you should always rely only on what financial institutions tell you in their own literature rather than trusting what's said on third party sites like this.

The article is badly written and is highlighting that from a legal perspective it's necessary for limited companies to have separate accounts, but underplays the fact that the Ts & Cs of personal accounts prohibit use for business purposes, so it's inaccurate for it to imply otherwise in its early paragraphs, although to be fair it does later clarify:

PRO [of using a separate business account]: You don't break your bank's terms and conditions. The reams of small print that comes with your personal bank account will usually say that you're not allowed to use it as a business account. You're unlikely to trigger this if you're, say, a freelance writer getting earnings transferred into the account. But, if – for example – you own a food truck and you'll make a lot of cash transactions, then your bank will likely close your personal account, or ask you to open one of its business accounts.

but of course that's just an opinion....