Is a Business Bank Account compulsory for a sole trader?

Is a Business Bank Account compulsory for a...

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Does a sole trader need to have a business bank account by law?

Can he/she use the indivudual/private account for any transaction?

Replies (10)

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By cheekychappy
13th Oct 2015 17:47

No, a sole trader is not required to have a business account.

It is good practice to do so.

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By pawncob
13th Oct 2015 17:47

No

He can use any account he may have, in his sole name or with others, as a business account.

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By Sage Newbie
13th Oct 2015 18:01

Thank you, what about limited companies?

Thank you. What about Limited Companies? I came accross one company which used both business and pernonal accounts.

Is this allowed?

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Scalloway Castle
By scalloway
13th Oct 2015 18:04

Limited Company

A limited company should have a business bank account to receive income. Expenditure can be done from any account.

 

A sole trader may find that their bank will insist on a business bank account being opened.

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By BroadheadAccountants
13th Oct 2015 19:03

Separate account for ease of admin

I would swim against the flow and recommend a separate bank account for business so as should you be looking for the business items they are all separated.

 

This being noted we hardly ever see a personal bank account statement as we ask clients to summarise all transactions.

 

 

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Replying to Tax Dragon:
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By chatman
14th Oct 2015 09:05

Swimming against the flow?

BroadheadAccountants wrote:
I would swim against the flow and recommend a separate bank account for business

How is that swimming against the flow?

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Replying to SXGuy:
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By BroadheadAccountants
14th Oct 2015 09:13

Contra

chatman wrote:

BroadheadAccountants wrote:
I would swim against the flow and recommend a separate bank account for business

How is that swimming against the flow?

My thinking was I was going against the growing consensus.

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Replying to Duggimon:
Stepurhan
By stepurhan
14th Oct 2015 09:19

Not at all

BroadheadAccountants wrote:

chatman wrote:

BroadheadAccountants wrote:
I would swim against the flow and recommend a separate bank account for business

How is that swimming against the flow?

My thinking was I was going against the growing consensus.

The general consensus is that you CAN use any account for a sole trader, not that you should. Most people are still recommending a separate account, with some indicating the bank may insist on it.
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By Sage Newbie
14th Oct 2015 11:52

Summarising

Ok, so summarising:

- It is RECOMMENDED a business account for either Sole Traders and Ltd Cos. and it is RECOMMENDED that ALL transactions are made trough the business account.

(I understand this will not only facilitate our job, but also tax officers' job and it is good practice to maintain business records neat and separate from personal)

However by LAW:

- Sole Traders are not required to have a business account

- Ltd Companies should receive their Income ONLY on a business account

- Ltd Companies are NOT required to use ONLY business account for expenses

Is this correct?

 

 

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Chris Caspell CTA TEP
By ccaspell
14th Oct 2015 12:04

It also makes any HMRC enquiry easier

Agreed that a separate bank account it is not a legal requirement for a sole trader, but it is to be recommended.

The reason I give to my clients is simply this - if HMRC enquire into your affairs they will usually ask for the 'business records'. If a separate bank account has been used this (hopefully) makes it much simpler to give over, and explain all the transactions that have gone through that separate account. If a mixed private and business account is used, it may be much more tricky for you to remember that the £300 bank deposit received two years ago was actually a birthday present from rich aunt Agatha.

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