Sole trader - Normal Bank account used for business?

Sole trader - Normal Bank account used for...

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For a sole trader / freelancer, is it a requirement for the bank account used for business to be an actual business bank account?

This is the account used in online accounting software etc.

I.e. there seems to be little advantage of paying premium for a very small business so would like to avoid it.

Replies (5)

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By King_Maker
20th Sep 2014 12:21

No.

However, you might find that the bank closes the account i f they discover it is being used for business purposes.

Do you trade under your own name?

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By emanresu
22nd Sep 2014 14:53

..

Banks don't like to see personal accounts being used for business.  They tend to write stop-it-or-else letters!

If you want a cheap business bank account and don't need branch counter services, take a look at RBS Business Banking Direct.

 

 

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By Carolynne
22nd Sep 2014 15:25

2 years free banking with RBS

I had a client recently open a business account and they have received 2 years free banking with RBS.  If you don't have a lot of transactions going through you are probably only talking an average of around £6 per month once the initial free period is over.

 

From an accountants point of view, if you open a separate bank account, I will be spending a lot less time going through your bank receipts and payments for the year. which would be reflected in a lower bill.  (Fewer queries too, as the information will be more transparent).

 

Finally, if HMRC ever wish to look at your records, you will look better for having kept your personal and business records separate.

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By Nobody2
22nd Sep 2014 15:44

Always advise clients to do this. Separates the personal from business and helps to give an impression of professionalism if queried. 

Was surprised to hear that a bank might close the account if they didn't know it was business. Does this actually happen or is it another urban myth?

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By Justin Bryant
22nd Sep 2014 15:44

Another advantage

Of having a separate business bank account is that HMRC cannot then see your personal private bank account entries (unless they have some justification for that, as that is then not part of your business records under TMA 1970 etc.).

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