Whether you are a Sole Trader or a Limited Company, you need to have bank accounts set up for your business.
If you aren’t sure which type of account or how many of them you need, then read on …
Always shop around when choosing your Bank, compare monthly rates, cashback deals and interest charges.
For Business accounts make sure you look at transaction charges too.
If you are a Sole Trader we recommend that you have one business account for all your income and expenses and then another account to put money into for your Tax, VAT, National Insurance etc.
Each time you get paid, just transfer approx. 30% of the monies into the second account and you’ll be banking up money throughout the year in preparation for your end of year and the amount that you’ll owe the tax man. It’s another easy way to reduce the end of year tax panic.
One of our Top Tips is to keep your personal income/expenses and your business income/expenses separate – it makes it so much easier and will save you tons of time when doing your Personal Tax Return. It might even save you money if you’ve got an Accountant doing it for you as it’ll take them considerably less time to work through your accounts if they are separated.
If you have a Limited Company you’ll need to open a Business bank account for all your Company income and expenses this is because your business is a separate legal entity. The main difference between personal and business accounts is that you usually have to pay to have a Business Account. Most business bank accounts charge a monthly fee and additional charges for certain types of transactions.
As a Limited Company we recommend having a second account and doing the same as above in preparation of your Corporation Tax liability. Just move across a provision each month into the second account and you’ll be banking up a pot of monies which you can use for your end of year tax liability.
Obviously, you can have more than two bank accounts if you want to, for instance you might want a business savings account, or you might want to put funds aside to purchase an asset or reinvest into your business.
You can watch a short video about this here: live Bank Accounts
If you have any questions just pop them over to Cathy at firstname.lastname@example.org