As business bank accounts typically have charges, it can make sense to try to avoid these costs and using a personal account is an easy way to do this, however there are reasons you may want to opening an account.

Do I need a business bank account if I trade through a Limited Company?
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Simple really, yes.

If you trade through a Limited Company, not only must you use a business bank account, the account must also be in the Company’s name.

Any money that the Limited Company makes, belongs to the Limited Company. If you hold the Limited Company’s money in one of your own bank accounts, the money will effectively have been withdrawn and that can have tax consequences.

This is worth keeping in mind if you decide to put money aside for corporation tax. Every bank account must be in the Limited Company name.

Do I need a business bank account if I am self-employed?
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Not really but you probably should…

HMRC do not require that you use a business bank account, your bank may disagree..

If you are doing the sort of work that has one or two invoices a month, regular direct debits, similar to the activity in your personal account then it might not be a problem.

  1. So why would I?

It makes bookkeeping a lot easier. Saving you time.

You can see how your business is performing quicker. Not true for all businesses but for a very simple business, you bank balance can then help very quickly determine how well you are doing with the business finances.

Its better for privacy. You don’t need to give your bookkeeper or accountant or even HMRC your private bank statements

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