Mrs is setting up as a sole trader. Various conflicting advice out there, so feel free to add some more....... We've decided to get a separate account for the business, mainly for ease of accounting. She's not vat registered, won't reach the turnover threshold and can't see any applicable benefits to doing it. So, to choosing a business account over another personal account? I favour a business account as looks more professional and has links to accounting and invoicing programs. Also will be taking payments by card/ bank transfer and this may ring alarm bells with a personal account and breach t&cs? Some business accounts are now charge free such as Starling which we are favouring as have a personal account there too. One of her customers ( a cash in hand type, gardener) , has told her to get a personal account as the taxman will take more if it's a business one, but I can't see any reason this would be true, am I being naive, or is he just dodgy So, are there any cons to having a business account over another personal account? Ta
This page covers the pros and cons quite simply. I don’t see how you’d pay more tax with a business one, just potentially more fees which is where the gardener may be getting confused. https://www.simplybusiness.co.uk/knowledge/articles/2021/02/do-i-need-a-business-bank-account/
The link above says it all - but a little simplistically. It's definitely necessary to have a dedicated account for the business. Whether or not it needs to be a 'business account' depends how busy you're expecting it to be, your chosen banks T's & C's and who you prefer to bank with. I ran a business for years from a Co Op personal acct. Chosen because they're a fairly ethical bank and they never once questioned the transactions. Obviously there might be an issue with any trading name, but again - hardly anyone uses cheques nowadays. Most of our customers just paid by bank transfer.
Or he is confusing it with cash in hand you can avoid mentioning to the taxman (illegally) and putting Everything through the books You can do it either way and it depends on how the business works. If it’s just a consultancy with no real outgoings and just payment in for services you can probably just use a personal one. But if you are actively trading and buying and selling you really need a business one.
Don't overthink it, the main thing is to have a separate account for the business. If you can have a business account without any costs then go for it but if not a personal account will do the job for a basic business, which I've used for years without any problems. Good luck for your wife's venture.
I have both, my main business has a business one, mainly down to the quantity of transactions, my other goes into a personal one (but solely used for company) due to lack of transactions. Really depends on your preference, only thing I would recommend is if you use a personal one keep it purely for the business. You don’t have to it just makes it easier.
I've used my personal account for many many years. It's not been a problem to keep the business transactions separate and if like me the ins and outs are absolutely clear then you'll find it easy to run. I don't know if banks still charge for a business account but there also used to be charges for handling cheques and cash. I got so miffed at how much my bank was taking off me that I decided to run it all through my personal account. That's about 20 years ago and I haven't looked back. I have the same name for my business as my own name. As for year end accounts it's easy to do and mine only take me a couple of hours to do. Assuming yours are simple in and out transactions like mine. You can easily tell from your bank statements which they are. Oh and I pay my income cash into the post office ... No charge there. And it's instantly available. Avoid cheques, though I don't take them. Waste of time these days.
Yes I've used personal account for 30 years. Benefis I don't have the buiseness accounts fees. It's worked without any issues so far. I see your point of it looking more professional, however as mentioned previously, it's easy to identify for accounts purpose.
I've been banking on my own for years. You can do it anywhere. The sofa, toilet, shower and the bedroom.
