The short answer is yes, you do.
But there is more to it than a short answer, and plenty of reasons why you should speak to your chosen bank and open up a bank account dedicated specially to your business. We know it’s tempting not to bother; after all, opening up a bank account has never been a fun chore, but it’s much harder to transfer a standard bank account – which might be combined with a personal one – into a business account at a later date. If you want to make your accountant’s life easier (yes please!), and your own, come to that, then having a separate, dedicated bank account for your business is one of the best ways to do it.
It is pretty much essential to separate your business money from your personal money. Two bank account might sound cumbersome, but it’s the way to go.
Even if your business is ‘just part time’ or ‘may not come to anything’, there is every chance that it will become full time, and become something big, and although it’s certainly cheaper and more convenient to mingle your accounts into one, it’s not very business savvy, and an audit can be a very uncomfortable thing indeed. It might be easy at the beginning, but it is just lining up trouble for the future.
So yes, there are reasons, apart from the above, why a separate, dedicated business bank account is the best choice when it comes to your money.
Firstly, the government want to know. They want to know everything. And if they want you to confirm that you are running a legitimate, professional business that may or may not need their help one day, you’re in for a tricky time unless you have a stand alone bank account to show them.
Next comes the tax return. Completing and filing a tax return is no one’s idea of a fun time, but when you have to wend your way through your own personal incomings and outgoings, and try to work out what was business and what was pleasure, it gets even harder. You’re sure to miss something, which is bad, or you may even add something that you shouldn’t, which is worse when it comes to being found out and fined. Well kept, tidy records from the beginning make this yearly chore quicker, easier, and less of a headache.
Imagine this scenario: a customer wants to pay you. They want to pay you using a card. All is well until they get their statement and it has your name on it. Not a business name, not a shop name, nothing professional, just you. It might make wonder exactly how professional you really are. They might be concerned about using your services again. Or perhaps they want to pay using an online transfer. And what do you tell them? You tell them your own personal details. That’s not safe for you, and it’s not comforting for them.
There is a lot of choice out there when it comes to business bank accounts. Some are more expensive than others, some will offer rewards, some will have better helplines… It’s down to you to do your research and choose the bank that will work best for you.
We just suggest you do it sooner rather than later.