When starting up a business, you will, without a doubt, have many questions. One of which may be about your banking situation. Should you open a business account, or stick to your personal one? Although business accounts do come with some charges, it may be worth looking into.
Trading as a limited company
If you are trading as a limited company, then you should open a business account as soon as possible. Any money that your company makes belongs to the company, not you. If you hold any money from your Limited Company, you will be treated as if you withdrew it from the business, and will therefore be taxed on it.
You don’t technically need a business account if you are self-employed, but many people choose to have one to simply to cover themselves and to makes things easier from a financial perspective. However, if your business has multiple card transactions from different customers, then you may be in breach of your bank’s terms and conditions, so it’s worth looking into.
Will opening a business account benefit me?
YES! Not only will it make your book-keeping much easier to do, it will also allow you to monitor the performance of your business.
Rather than tediously going through your personal account to pick out the relevant transactions, it will all be in the same place. Time-saving and stress-free!
Having a business account will also show you in black and white, how your business is doing. If the balance isn’t positive or isn’t at the level that it should be, you know that there is an issue, and you will know that things need to change.
Banking with privacy
If HMRC decided to inspect your account, then they are well within their rights to look into any transactions made. You may pay yourself a salary, or pay into a savings account, or maybe you send money to your spouse. HMRC can and will look into each of these transactions. Additionally, if you have an accountant, they will also be able to view all of your spending habits. It may not seem like a big deal, but do you want them looking into everything that you purchase?
A business bank account may be the last thing that you think about, but it will certainly make things easier for you in the long run. If you have recently set up a business, or have decided to go self-employed, and need an accountant, please do get in touch.