5 Reasons You Need a Business Bank Account in the UK

Posted by Joseph Mathew on October 20th, 2021

If you own a limited company in the UK, then it is legally mandatory to have a separate account for your business. But it is advisable to keep a dedicated account, even if you are the sole owner, a freelancer, or operating a small-scale business. Read further to know the top 5 reasons why you must consider opening a business bank account.

While starting a venture, you may be tempted to use your personal bank account for business transactions as well to keep yourself from the hassles of opening and maintaining a separate business account. Though it can make things simpler initially, it may be disadvantageous for your business in the long run.

Let’s look at some of the reasons why you must open abusiness bank account:

1. To Keep Your Business Finances Separate From Personal Account:

It enables you to keep all your business transactions separate from your personal transactions. Hence, the finances are more organized and easier to track for accounting and audit purposes. Mixing the two can lead to confusion and inaccurate entries while preparing account statements, tax filing, etc.

2. To Avail Benefits Offered With Business Bank Accounts:

Personal accounts are meant for individual use and may not offer the kind of facilities you would need for making smooth business transactions. A business bank account generally offers a higher no of daily transactions in all major currencies, daily interest calculations, penalty-free withdrawals, business debit cards, fast and easy international money transfers, and a dedicated relationship manager for 24*7 support.

3. It is Easier to Sync Business Accounts With Accounting Apps/Softwares:

Accounting software such as Xero and Hubdoc can synchronize and take feeds from your business bank account directly to keep track of the sales, purchases, and other relevant transactions. Hence, a business account is a convenient solution that allows one to make the most of the available technology.

4. Gives a Professional Look to Your Business:

Using your business name instead of your name while making business transactions gives a professional outlook to your business. Also, holding a business credit or debit card builds up a rapport and high credit rating for your business. Keeping a separate business account showcases your seriousness and commitment to the business.

5. Allows Convenient Tax Filing:

Tax filing is a tedious job that needs to be done carefully. If you have a separate business account, then it is easier to calculate the tax liabilities and file the return. If you use a common account for business and personal transactions, then you would have to first separate the transactions, and also, there may be a possibility of errors. Any over-calculation or under-calculation of the tax liabilities will only add up to your hassles and wastage of time.

Even if you have a small business, getting a dedicated business account is an intelligent move. It will showcase your professionalism and seriousness towards the business and offer lots of benefits to enable efficient handling of business transactions.