Do I need A Business Bank Account?

A business bank account makes it easier to manage your company’s money and more.

From building credit to keeping your finances clear, you may not need a business bank account, but it gives you a huge advantage.

Is It a Legal Requirement To Have a Business Bank Account?

If you’re a sole trader you legally do not need a business bank account, but keeping your money and your business’s money separate is a great way to manage your company’s finances.

If you own and operate a limited company that is registered with Companies House, you must have a business bank account. This is because your business is legally separate from you, and must have its own bank account rather than using your personal finances.

Benefits of a Business Bank Account

Easier To Manage Your Finances

Separating your finances from your business’s finances is the easiest way to manage your money. Particularly, if your business’s revenue is high. With its own bank account, you can keep an accurate track of when money comes in and goes out. Moreover, accurate tracking of cash flow allows you to have better control over your business planning, which is essential for the success of your company.

Secondly, a separate business account lets you keep track of any expenses such as train tickets or wifi. This makes it easier to calculate and claim any tax savings. If you were to use a personal account it can be easy to confuse business expenses with your personal expenditure. 

Building Good Business Credit 

A huge benefit to a business account is building a credit rating for your company. A healthy credit rating can make access to funding easier, and make your business more appealing to clients and partners.

However, it is important to manage your finances well and not to overspend on credit, this can have a negative impact on your business’s credit. 

Enhance Your Professional Image 

Clients and partners may be reluctant to pay fees into a personal account, by having a business account you add an extra level of credibility and professionalism to your business. 

Extra Perks From Your Bank Provider

Whilst you can opt for a free business bank account, often the paid accounts come with tons of additional extras which are great for your business. These can include anything from invoicing tools to business advice and integrations with accounting software.

Of course, if you use Companies MadeSimple to form a limited company we can set you up with a trusted banking partner, some of whom provide cashback or other exciting extras. 

How To Pick The Right Business Bank

There are many banks available to choose from. However, it's important to make a choice which will suit your business now and in the future. Therefore, make sure you do your research, read customer reviews and compare different banking options.

You can open several business bank accounts to meet your business needs. However, this does spread your money and make it harder to manage finances.

A few elements to consider when choosing a bank are:

• Fees and Charges: Unlike a personal account, business accounts often have fees. Of course, certain banks do offer fee-free options, but as your business grows you may have to switch to a more comprehensive bank account which offers benefits like expense cards etc. Consider how a monthly fee may affect your budget and whether the free options are exhaustive enough for your business. 
• How you’ll Access Your Bank: Business accounts are offered by all major hight street brands and most of the online ‘newer’ banks. If you prefer a face-to-face conversion over phone calls or messaging, traditional banking may be a better fit and vice versa. Secondly, if you need to regularly deposit checks or cash, then you may find yourself leaning towards the traditional banks. 
• Business Support: Think about the help you’ll need as a business owner and whether your bank is suited to help you achieve your business goals.

How We Can Help 

Here at Companies MadeSimple, we work with a number of trusted banking partners who provide cost-effective banking solutions. Our banks offer a range of different perks and services suited for you.

You can visit our partner page to see our current partners and explore the best options for you.

Business Banking: Key Takeaways 

• You must have a separate business bank account for your limited company, but if you are a sole trader, you do not need a dedicated business bank account. 
• Business bank accounts help you manage your money better, track expenses and build a company credit rating. 
• Take time to pick your banking provider in order to get the most out of your bank for your business.