Do I Need a Business Bank Account if Self Employed?

thefinanceshub.com

If you are new to running your own business, then the financial side of it can often be confusing. Even if you have a decent understanding of finances, the banking side of running a business confuses a lot of people. It is easy to make mistakes, and this is something that you want to avoid when you are first starting out. 

In this simple guide, we’ll be taking a look at whether, or not, you need a business bank account if you are self-employed, and lots of other helpful information. So, let’s get started. 

Do-I-Need-a-Business-Bank-Account-if-Self-Employed
Do I need a Business Bank Account if Self Employed?

Depending on your situation, you might not legally need a business bank account if you are self-employed.

If you are a sole trader, then there is no legal requirement for you to get a business bank account. This is because you are the sole employee of that business, so the only wage to pay is your own.

As you are the only employee, technically all the money that you make is your own. So, you can just use your personal account as long as you pay your taxes. 

If you are self-employed and run a business with other employees, then you can use your personal bank account. But it is much more appropriate to get a business bank account.

If you use a personal account, then it is very easy for the lines to get blurred, and for mistakes to be made. Keeping your business and personal accounts separate is the best way to avoid this. 

So, yes, you should get a business bank account if you are self-employed. In fact, we would even recommend getting a business bank account if you are a sole trader.

When it comes to business, it is a lot easier to keep that aspect of your life separate from your personal life. So, it is best to open a business account. 

Can I use my Personal Bank Account for my Small Business?

Technically, yes, you can use your personal bank account to manage the finances of your small business. But, you shouldn’t do this. While it might seem tempting to stick to one bank account, as the maintenance for both might seem like a lot, you should not do this.

Over time, you will find that keeping one bank account can quickly make things messy, and it is much better to keep things separate. 

The main reason why you should keep your personal and business bank accounts separate is because it protects you legally.

Having a bank account solely for your business means that you can manage ingoing and outgoing financial transactions, and not worry about any personal purchases getting in the way. 

So, you can use your personal bank account for your small businesses, but this really isn’t a good idea. If you are new to running your own business, then it is best to start off as you mean to go on, so keeping these accounts separate is the best way forward. 

Can I open a Self-employed Business Account?

There is one primary requirement that banks have from those applying for business accounts, and that is that they own a business.

This business does not have to have many employees, you can quite easily be the only employee, it simply has to be registered legally as a business.

Once your business is legally registered, you will be able to open up a business account with multiple different banks. 

Most banks now offer business accounts that can be set up without a fee. There used to be a lot of different charges attached to this, and that is why lots of people simply used their personal accounts, however, costs are no longer an issue.

Business accounts come with lots of perks, and they also ensure that all business money is kept separate from personal income for tax purposes. So, if you are self-employed, you should definitely open a business account.

Which Bank is Best for the Self-Employed?

If you are new to running your own business, then business accounts probably aren’t something that you know a lot about. Most high street banks offer business accounts, and there are lots of other banks that specialize in business banking. 

Some of the best bank accounts for the self-employed include:

– Lili Account
– Oxygen Business Account
– Novo Business Checking
– NBKC Business Account
– Chase Business Complete Banking

So, if you are looking to set up a business account for your own business, we would highly recommend checking out the accounts that we have listed above. 

Summary

In short, no, you do not need a business account if you are self-employed. But, it is best to open a business account if you are running your own business, as this allows you to keep the lines clear between personal and business transactions.

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