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Current Accounts for Newly Self-Employed
Hi,
I’m newly self employed and money coming in from my new career is going to be quite low over this first 12-24 months.
I have a business account set up separately for my business needs and now want to change my personal current account.
I want to keep business and personal separate.
From the guide on the website it’s not super clear what I should go for.
Does anyone have any suggestions?
TIA.
Comments
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With which bank is your present current account? Why do you want to change?
Lloyds has a good switching offer at the moment.https://www.lloydsbank.com/current-accounts/switch.html
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I have a business account set up separately for my business needs and now want to change my personal current account.
I want to keep business and personal separate.
Surely if your requirement is for a personal current account, to be kept separate from your business activities, the fact that you're going to be self-employed isn't relevant to your choice, and you can go with any of the mainstream providers' products?
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I would probably go with the most lucrative bank switch bonus available for switching your personal current account.
You say your income is going to be fairly low over the next few months but some of these bonuses don’t require a minimum salary, just a minimum amount deposited each month (meaning you could transfer it in / out again multiple times to qualify). Without more information to go on, you’re best off assessing the criteria of each deal to see what you think you could manage.
Also, don’t be put off by Direct Debit requirements - these are easy to meet either with savings and investments like PayPal, Plum or MoneyBox for free - or using low-cost convenience services like BonusDebits (but you get nothing in return).
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But switching a personal current account doesn't make it into a business current account. Personal current accounts can, and do, get closed if they are operated for business use in breach of personal account T&Cs.
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I don’t think the OP mentioned that they are wanting to switch a personal to a business account though? It seemed like they just want to switch their personal account.
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Ah yes, my error.
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It's not a business account no but you don't need one as a sole trader, you don't technically even need a separate one but it's sensible to do so. Monzo and Starling both did (do?) offer sole trader non-business accounts
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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It depends what you mean by 'technically', but, regardless of the legal situation, from a contractual perspective using a personal current account for business purposes will usually breach the account's Ts & Cs - if Monzo and Starling offer some sort of halfway house account in between a personal and business one without such a term then that's their prerogative, but I'd suggest that it makes them outliers.
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I mean technically in that (aside from any bank specific requirements), a sole trader could have their income paid into their own account, there is no legal requirement to have a separate account at all nor a business one.
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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But eskbanker's point was that technically using a personal bank account for business, sole trader or not, is against most bank's terms. The fact that it is not a legal requirement for an individual sole trader to have such an account is not relevant to the technical terms of the bank account.
This is all off-topic of course, the OP (who may or may not be a sole trader) isn't asking for advice about business accounts - as they have, very sensibly, set one up already.
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