How to find a good business bank account if you are self-employed?
If you are self-employed, there are a number of features that you can look out when searching for the best current bank account including:
Money EditorPublished on Wednesday, 4 September 2019
It is not a legal requirement to have a current business account if you are self-employed (where it is a legal requirement for limited companies). However, it can be very useful and practical for self-employed workers and sole traders if:
One of the main reasons for getting a current account is so that you can organise your income, payments and expenses more efficiently for the HMRC. When putting together your tax return and paying your tax bill, it can be difficult trying to work out what travel or expenses were for personal use or for business use – but with a business account, you have things totally separate and it is much easier to organise.
Some banks will not allow you to use your personal account for business use as mentioned in their terms and conditions. This is particularly in the case of a limited company, because the money is not necessarily all yours – some will be for staff or other stakeholders. You therefore run the risk that using your personal account too often for business related activity could lead to getting a warning or your account being frozen or closed by the bank.
If you are looking for a business loan or business credit card, you will get preferential rates and faster approval through the provider that you bank with. Naturally, you will need a business current account to be eligible for a business credit card.
It also looks more professional if you are invoicing from a business bank account, rather than a personal account.
A business account works in the exact same way as a personal account, in terms of how you accept payments through BACS, transfer money and make payments etc. You will also get a cheque book, direct debit card and access to telephone banking like you would with any personal current account. The main benefit is that you can organise all your expenses and payments separately which is convenient for filling a tax return.
Whilst you may have less perks with a business current account in terms of cashback and vouchers, there are many other advantages such as having access to a business bank manager, free business advice, discounts off business products and faster access to business loans.
Yes, if you earn over £12,000 per year, as a person who is self-employed or a sole trader, you will need to register as a sole trader with the UK government. This assumes that you are self-employed and are responsible for paying your own tax and any money earned you will be able to keep as a profit after paying any costs and taxes.
Other requirements include:
Compare features such as free business banking, interest on in-credit balances, overdraft facilities and banking fees in an easy-to-view tables to find the best account for your business.