Do I Need A Business Bank Account For My Llc – Taking care of your finances is an important part of running a business, from understanding how business banking works to choosing the best account for your needs.
According to Smart Money People, more than half (51 percent) of small and medium-sized businesses plan to change their main bank or bank offering in 2023. If you want to go shopping, our guide is a good starting point.
Do I Need A Business Bank Account For My Llc
Read on to find out more about opening a bank account for your business, from legal and tax issues to key features of high street and challenger banks.
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Whether you are legally required to have a business bank account depends on the structure of your business. Having a business bank account can be a good idea for most businesses, even freelancers and sole traders.
The main difference between personal and business bank accounts is that business accounts usually charge monthly fees, and charge a certain amount for certain transactions. Many banks often offer a grace period before you can downgrade, so be sure to shop around before choosing one.
Ultimately, a business account is the best option for your business because it allows you to keep your finances separate.
As a sole trader, you are not required by law to have a business bank account. Legally, you can use your personal bank account for both business and non-business transactions or create a second personal bank account to use for your business.
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Since a limited company is a separate legal entity, it must have a bank account.
If you are not sure which business structure to choose, consider the difference between a sole trader and a limited company.
Even though you are not legally required to have a business bank account, there are several reasons why it is a good idea to set one up.
Some banks offer special business personal trading accounts. This gives you the advantage of keeping your finances separate, but usually with a lower monthly fee depending on the services you need.
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Your personal bank account statement may state somewhere that your account must be for personal use only.
If your bank realizes that you are using the account for business (especially if you have a lot of money), they may force you to close the account and open a business account.
Once you’ve completed your tax return, you’ll need to tell HMRC how much your business makes. You can deduct certain allowable expenses (such as travel expenses and office expenses) to calculate your taxable profit.
When your personal expenses are mixed with business expenses, it can be difficult to keep these accounts straight.
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Having a business bank account not only helps with reporting to HMRC, but also makes managing your business budget and forecasts much easier.
Determining which expenses are personal and which are for your business takes time, so having separate bank accounts can help you manage your finances more effectively.
Having an account in your business name will help you apply for business loans in the future.
This helps build your business credit history, which many banks look for when considering whether you qualify for business financing.
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Having a designated bank account can make your business look more professional because customers can deposit money into an account in your business name instead of your account.
If you have set up a limited company, by law you must have a business bank account as your business is legally a separate entity.
Do you have employees or do you plan to soon? If you are a sole trader dealing with your own payroll, it can be overwhelming without a separate account.
Do you need to apply for a loan? Although not essential, having a business account can help you apply for business loans and other forms of financing.
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Do you want professional business support? Many banks have separate departments that manage services for businesses. By using a personal account, you will lose.
Once you’ve done your research, opening an online business account can take anywhere from one to four weeks as the bank goes through a series of checks.
To get started, you’ll need some personal information and business documents. Opening a business account is much faster if you go completely digital.
Once you have decided that you need a business account, you should research which bank offers the best account for your business needs.
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BVA BDRC conducts regular independent surveys for the Competition and Markets Authority (CMA), providing consumer insight advice. This survey asks people who have a business bank account how likely they are to recommend their provider.
The survey of 18,000 small business bank customers covered 15 banks and was conducted between July 2021 and June 2022.
We’ve used the latest data to list the best business banks, allowing you to compare business accounts from the best providers.
*Starling Bank, Tide and TSB were not included in this category due to their small sample size, and Monzo was not included because they did not offer additional services or loans.
Do You Need A Business Bank Account?
Here’s more information on the products themselves, allowing you to compare business bank accounts from the best providers.
Challenger Bank Starling is ranked for the second time for the overall quality of services and online banking.
Starling Bank business account holders pay no monthly fees or UK fees and get free 24/7 UK support.
Accounts are available for all types and sizes of businesses, including integration with a range of software solutions, FSCS protection and free withdrawals in the UK and abroad.
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Handelsbanken tops the survey for relationship management services and services. It was also ranked second in branch services and third in overall service quality.
It describes itself as a relationship bank where each branch operates as a local business. Handelsbanken says it helps them understand their customers and the public better.
The bank offers a direct line to an account manager and a team at your local branch, as well as current and overdraft accounts (depending on status) in a range of currencies.
There is no information on fees on their website, so check with your local branch to find out what they charge for your business.
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To open a business bank account with Metro Bank, you must have a balance of up to £2 million.
When it comes to fees, there is no allowance for daily balances above £6,000 a month. If your daily balance is below £6,000 during the month, you will pay £6 per month.
You’ll also get 30 free transactions per month in the UK, but if you go over that limit you’ll be charged 30p per transaction (balances below £6,000 don’t get free transactions).
Ranked ninth and fourth overall in mobile banking services, Barclays has specialized products for businesses of all sizes.
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A challenger bank is usually a small bank established to compete with large, long-established national banks.
More than half (54 percent) of SMEs planning to switch banks in 2023 will go to a challenger bank or fintech provider, according to a survey by Smart Money People.
And CMA data shows that competition, digital banking and multi-currency accounts are becoming increasingly popular with businesses.
Starling Bank topped the overall poll for the second time in a row, with Monzo and Tide also ranked high.
Business Bank Account
There has also been an increase in the number of sustainable banks, such as Triodos, which only finance projects and organizations that have a positive impact on society, culture and the environment.
Whichever bank you choose, it’s important to research all your options carefully and decide which one is best for you.
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Conor Schilling at Simply Business has two years of experience in the insurance industry. A trained journalist, Conor worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specializes in the buy-to-let, tenancy and small business finance markets.
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We provide this content for general information purposes and should not be construed as advice. Always seek professional advice. Read our full statement
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