You may be thinking that it will ‘just be easier’ to use your current personal bank account to run your business through and that no one will really care. I am here to give you 5 reasons why you shouldn’t use your own personal account for your business.
- Easier to separate personal and business income & expenses
If you use your personal account, it can and will become very confusing. You may look at your bank balance and smile, however you need to remember that you will have business expenses and bills to pay out of that balance. What would you do if you spent that money and could not afford your business expenses? It will also help you when it is time to prepare your tax return and will be more transparent if HMRC come knocking.
- Your bank’s terms & conditions
Have you checked the terms & conditions for your personal account? Most UK banks will not allow you to use a personal account for business. If they think you are running a business through a personal account, they have the right to suspend or close that account. You may think that it will not happen to you, but I have seen it happen.
- Promotes a professional image
Although you may start small, having a business account will help you portray a professional image and look like a serious business. There are some suppliers that will only supply businesses with a business account.
- Are you a limited company?
If you have decided to set up your business as a limited company, then a business account is mandatory. Limited companies are a separate entity to its directors.
- Help with finance
You may find you need to apply for a loan at some point and some lenders will expect and insist you have a business bank account before approving an application. This happened recently when businesses were applying for the bounce bank loans. If you had a personal account, banks were asking you to open a business account before applying.
You may not think you need a business bank account, but it will make running your business easier and reduce time and stress. In turn, it will give you more time to spend building your business.