Originally written by James Trowell on Small Business
Q: Should I use a personal bank account for my small business?
A: The short answer is no – but you’re not alone if you do. We conducted a survey earlier this year and found that 63pc of sole traders are using a personal account to pay for everything. Business, pleasure, household bills and everything else in between.
This might feel like an easy option for the busy, fast-paced life of a small business owner, but it doesn’t serve you or your business very well. One bank statement. One never-ending list of transactions. It’s likely to create a financially unstable solution to managing your money because you’ll never really know where you stand.
It’s a little different if you’re operating as a limited company. While it’s not strictly a legal requirement to have a dedicated business account it’s strongly advised. As your limited company is a separate legal entity, technically its money doesn’t belong to you and so needs to be separated from your own finances.
Here are some reasons why keeping your business and personal finances separate is a good idea:
Save time and money when it comes to your tax return
If you’re self-employed you can claim