B is for Business Bank – A to Z Accountancy Top Tips
This discussion crops up so often with business owners asking do I need a separate bank account for my business?
If you are running a limited company, then yes, it is a separate legal entity and it needs a bank account to be set up in the company name.
It is not compulsory for Soletraders and Partnerships to have a separate business bank account to your personal one. So many businesses just use their own. However, there are massive benefits to having one;
- Means your record keeping is so much easier – you don’t have to wade through all your pub rounds and online purchases you know all the transactions are business related.
- You don’t over pay tax by including a salary taxed elsewhere.
- You don’t over pay tax by missing expenditure that wasn’t clear.
- You can use it to save for tax bills ensuring you always have a buffer saved.
- Customers and Suppliers have the right details from the start. You might be starting up and think ‘oh I’ll change it if the business gets bigger’ but then you have a lot of changes to make when you get to this point.
- You can easily keep track of the business cashflow with a better understanding of what’s coming in and going out and the basic overview of the financial health of the business.
The same goes for your personal finances too.
- You can accept card payments.
- Build a business bank relationship / credit to get finance.
- Often it looks more professional.
So, in summary, you need a separate business bank account 😊
Thank you for reading this weeks blog – B is for Business Bank, see you next week.