bizSimple

The simple way to start a business.

Sunday 7 September

“Whatever you're going to do, if you don't enjoy it, don't do it”

Peter Green

Bank Accounts

It isn't actually a legal requirement to have a bank account for your business, but it certainly makes life simpler!

If you are trading as a limited company, then the company will have to have a bank account in its own right, as it is a separate legal entity and the money that is paid into it belongs to it directly. You should also have the ability to pay bills from the company, so a cheque book or debit card will be required too.

Even as a sole trader, or a partnership, a separate bank account gives you somewhere to store money and pay business bills that is separate from your own personal money.

FAQs

Do I have to open an account with a bank?

No. If it suits, you could open a Post Office account or a building society account instead. It's best to look into the advantages and disadvantages of each and then make your decision.

I am setting up a partnership. Does this mean we will both have to sign each cheque?

Not necessarily, but it helps to know what you are spending your money on! This decision will be down to practicality and will be between you and your business partner.

How much will I pay in bank charges?

This depends on the individual bank and you need to ask for details of charges at the start. You should get at least 12-months free banking anyway, but after this you will pay for each transaction through your account. Don't panic though, as long as your account is in order, as a small business it is unlikely that you will pay more than about £20 per month.

How can I reduce these charges?

You could open a Post Office account for the cash that you handle, as banks will charge per £100 cash that you deposit.

Talk to your bank to see what they suggest. You could also arrange to get paid by BACS transfer by your customers, and you could also look into this for your own payments.

Direct Debits and Standing Orders for regular payments can also reduce bank costs, and help you to keep your own money management more organised