What
Open a business current account, to use to receive payments from customers, and make payments for your bills.
Why
Whist not a legal requirement for sole-traders, having a business bank account to keep your personal income and business income seperate is hugely useful.
Not only does it simplify you to track your business transactions, but it can also help build a credit rating for your business, and it might keep you safe from any bank terms and conditions stating your personal account is not to be used for business banking.
Important to know
Not all business bank accounts are created equal - just in the same way, not all businesses have the same needs.
Make sure you think about what your business needs are, before opening a business account.
Some business bank accounts will have monthly fees, some are “free” but charge you per transaction. Make sure you understanding the costs and fees associated with your account.
How
1/ Make a list of what features and functionality you might need in an account.
Consider:
- Will you be the only individual needing to access the account?
- Will you be making lots of cash transactions?
- Are you making lots of transfers between accounts?
- Will you need to be receiving or sending money to other countries?
- Will you need an overdraft facility?
- Will you need to be taking payments from customers via a POS reader?
- Will you need access to a physical branch, or is online / mobile banking enough?
- What amounts of money might you be turning over or holding in the account?
- Do you need any additional features, like invoicing, cashback or a credit card?
- Do you prefer the idea of a traditional high street bank, or are you happy to have a modern “neobank” account?
2/ Start to shop around, using business banking comparison sites, and look closely at the fees, features, and limits - to ensure they match up to your requirements.
3/ Use your communities and ask around, see what experiences your fellow freelancers have had with the banks you have shortlisted.
4/ Look for introductory offers - many banks will offer 12 months free banking, or offers like a free company formation or discounted accounting software, but keep an eye out on what happens after any promotional period ends.
5/ Make sure you choose an account which offers FSCS protection, this means your money is protected up to £85,000
6/ Gather your business documentation together, and apply. You’ll be most likely asked questions around your type of business, expected turnover for the next 12 months, and details on how your company trades. Some bank accounts are only for sole-traders. Some bank accounts are only for limited companies.
7/ All done! Most bank accounts will get you your sort code and account number within hours of registration, and your payment card in a matter of days. As soon as you have your account details, you can accept payments from customers. If you’ve got an accountant, provide them with the details of your account.
