Does a Business Need a Separate Bank Account

Roz81

If you own a business can you use your personal bank account?  I have been using my personal account to pay all bills and suppliers.  And all income generate is going into the same account.  A friend has told me I need to separate the accounts as it's not good practice. 

Seems like a lot of hassle for setting up another account when my current one works just fine. My business is a lunch delivery service. Thanks

Marchitiello

Most Personal Account T&C  specifically point out that the account should not be used for Business. An argument could be made for a professional or self employed getting paid as a “person” not as a separate business but for any other Business Operations you definitely need a separate account. There are some challengers Banks business accounts you could pretty easily set up, some however are LTD or Partnership only, so you need to check what applys to your business set up. 

Billxx

If you shop around you may also find a bank that will offer business accounts FOC for a year or 18 months.  I think TSB have one at the moment.

DullGreyGuy

Roz81 said:

If you own a business can you use your personal bank account?  I have been using my personal account to pay all bills and suppliers.  And all income generate is going into the same account.  A friend has told me I need to separate the accounts as it's not good practice. 

Seems like a lot of hassle for setting up another account when my current one works just fine. My business is a lunch delivery service. Thanks

Own a business? As in a LTD? Or you mean you are a sole trader?

As a sole trader there is only you and so legal requirement to separate out your monies any more than there is between your bills money and your carefree spend money. That said, most personal lines bank accounts T&Cs prohibit the use of a personal account for business purposes and so doing so risks their wrath (but many get away with it). It's certainly easier when doing tax returns or showing the business's success etc to others if you have separate accounts as you then dont have to cross off all your non-work Sainsbury's or Anne Summers' purchases.

If you own a limited company then it's a different matter because it is a legal entity in its own right and so its money should go into an account in its name. 

Band7

It's a bad idea to mix your business and personal finances, even if your business is small. The T&Cs of just about all personal current accounts do stipulate that they are for personal use only, not for business.

Imagine there is a problem with your bank, e.g. because you flaunted the T&Cs or the bank has an IT problem etc etc - you could find yourself immediately without access to both, your personal and your business money.

I would keep my personal and my business finances with separate banks.

AFAIK, you can apply for free of charge business accounts with Starling or Monzo bank.

MattMattMattUK

Roz81 said:

If you own a business can you use your personal bank account?  I have been using my personal account to pay all bills and suppliers.  And all income generate is going into the same account.  A friend has told me I need to separate the accounts as it's not good practice. 

Seems like a lot of hassle for setting up another account when my current one works just fine. My business is a lunch delivery service. Thanks

It takes about ten minutes to do the initial application and around five minutes to do the KYC video call to verify ID, not a lot of hassle by any measure. 

If you get audited it is also a huge pain in the behind if you have to sift through personal and personal transactions and it also makes it more likely that accounting errors will occur. 

As DullGreyGuy says, if you are operating a limited company via a personal account then you have real issues. 

eskbanker

Band7 said:

Imagine there is a problem with your bank, e.g. because you flaunted the T&Cs...

More likely if you flout the Ts & Cs....

https://proofed.co.uk/writing-tips/word-choice-flaunt-vs-flout/

DE_612183

what happens when HMRC what to see copies of all your bank statements?

DullGreyGuy

DE_612183 said:

what happens when HMRC what to see copies of all your bank statements?

They see all the details in one set of accounts... the OP is presumably a sole trader and so if HMRC were investigating them it'd be for their Self Assessment and so they'd want to see all bank statements anyway.

DE_612183

DullGreyGuy said:

DE_612183 said:

what happens when HMRC what to see copies of all your bank statements?

They see all the details in one set of accounts... the OP is presumably a sole trader and so if HMRC were investigating them it'd be for their Self Assessment and so they'd want to see all bank statements anyway.

ah, yes didn't think of that

fenwick458

Roz81 said:

Seems like a lot of hassle for setting up another account when my current one works just fine

it's not much hassle, you can set up a Starling business account in minutes, and it's free