When you first set up your business, or start operating as a sole trader, you might think it’s easier to use your personal bank account to handle all incoming finances and all your business expenses. You may think that having a special business account is expensive or extra hassle. But it isn’t, most banks offer a free business bank account these days and there are some real benefits…
First of all, I bank with Barclays. I’m not pushing them as a bank. I have heard people complain about them, but they have always been good to me. They do charge a lot for foreign transfers but that’s not the focus of this article.
Before I get on to the business benefits let me just say that the personal benefits of setting up my business account were massive. For the first time, my bank started treating me like a real human being! They gave me a special privilege phone number that I can call 24 hours a day, 365 days a year, and talk to a dedicated account manager about any problems I have, not just with my business bank account but with my normal personal current account too! When I go to the bank, I speak to a dedicated business advisor! It really is a much more pleasurable experience.
Anyway, here’s the business perspective…
Manage Your Money!
Ok it’s an obvious point, but a serious one. You need to keep track of your money. At some point you will have to declare your taxes, meaning everything you’ve spent and earned must be accounted for. Trawling through your personal bank account will make it hard work and you’ll undoubtedly miss something.
As well as your business current account, you should also open a special instant access savings account so that you can put some money in every time you make a sale. This should be enough to cover the tax for that sale. When the time comes - you’ll have the money ready to pay the tax man, and in the meantime its earning interest for you :)
Professionalism
Once you have you have a bank account in your business name, people can write cheques payable to your business rather than payable to your name. People put more trust in paying Plumbers Direct than Joe Bloggs, for example.
It also feels nice going to the bank and paying in a cheque for your company account. It makes it feel like the business is doing well (which of course it is :)).
Add-Ons
There are other things you should consider like insurance for your business. Your bank will undoubtedly be able to offer you a product in this area and will probably give you a nice discount as a new business bank account holder.
Conclusion
It’s definitely worth getting a business bank account. I haven’t even touched on perks like having a business credit card which can help offset costs and so on. If you use online banking then you can access your business accounts any time of the day or night without trudging through all your personal payments.
Let me know how you get on.