‘Do Sole Traders require a separate business bank account’

Posted on 29th March 2022 by Steven Burton

Leanne Piper one of our Digital Accounts Associates has recently prepared a blog explaining the benefits of keeping things simple and using a separate business bank account for your self-employed business…

Many people are aware that Companies are required to have a separate Business Bank Account for business transactions. I am here to talk to you about whether or not a Business Bank account is useful to Sole Traders.

It is!

If you do not own a Company, you are likely to be classed as a Sole Trader or Partnership, which covers a large portion of the UK’s private business sector. A Business bank account for Sole Traders is not a legal requirement, and it is possible to use your private bank account for business use, however, sit back and ask yourself, ‘is this the most efficient way to keep track of my business transactions?’

Here are our 5 top tips:

1. Having a Business Bank account will not only improve your accounting records, but is also a huge time-saver as you won’t have the confusing mixture of personal and business transactions within one account.
2. Some High Street bank accounts may restrict you from depositing business income into a personal bank account.
3. A Business bank account may incur small costs, however there are a number of different features that are beneficial such as, organised handling of expenses and financial protection for yourself and your business just to name a couple.
4. Having a separate business bank account allows you to be able to manage your cash flow more accurately without your personal transactions slowing the process.
5. A Business bank account also means that you are ready for ‘Making Tax Digital’, as you will find it easier to use cloud software to file the returns needed.

Next steps

The Steven Burton & Co team are here to help you, do contact us if you would like to discuss any o the above, we are happy to help. If you need some advice or a steer in the right direction, then please don’t hesitate to get in touch.