Can you use a personal account for business?

When you first start a business, there are plenty of demands on your time and wallet, so it’s easy for banking arrangements to slip down your list of priorities. However, in some cases, you may be legally obliged to use a separate business bank account, while in others, it simply makes life easier. 

Can I use a personal account for business? 

From a legal standpoint, there’s no reason why you have to have a business bank account if you’re a self-employed sole trader or in a general partnership. This is because these business structures are not viewed as separate legal entities. However, it’s different if your business operates as a limited company, limited partnership (LP) or limited liability partnership (LLP). These are viewed as legal entities in their own right and must have separate business bank accounts. 

Find out about setting up as a sole trader or limited company 

Another reason you may need to switch from a personal to a business bank account is that you may be violating your bank’s terms and conditions (T&Cs). Many banks forbid using personal accounts for business purposes and can close accounts used in this way. This can cause all manner of problems until you can open a new business bank account. 

What’s the best way to use a personal account for business?

If you still want to use a personal current account for your sole trader business, it’s best to set up a new separate account rather than using your existing one. This is because having two accounts will help keep your personal and business transactions separate, which makes it easier to assess your cash flow and track business income and expenses.

Why should I use a business bank account? 

Aside from legal obligations and your personal current account’s T&Cs, there are other compelling reasons to open a business bank account. For example, dedicated business accounts: 

• Simplify taxes. A separate account means that you don’t have to sift through personal transactions to find business expenses when filling out your tax return. Many can also be linked to accounting apps, which makes things even easier 

• Give you financial clarity. With a separate business account, it’s easier to assess your company’s financial health (income vs outgoings) and take swift action to remedy problems  

• Improve your credit score. Banks review your business’s credit history when deciding whether to accept your applications for business loans, overdrafts and credit cards. A well-managed business bank account that demonstrates your turnover will improve your business credit report, increasing your chances of being accepted on favourable terms  

• Unlock useful perks. Many business bank accounts include benefits that can help your operation, such as free business advice, card payment solutions and accounting apps

Find out more about the benefits of business bank accounts

How to find a business bank account  

Most banks offer business accounts, so finding one isn’t difficult. However, to ensure you choose the best business bank account for your operation, it’s a good idea to compare them using an online comparison service. 

Tips for comparing business bank accounts

When selecting the best business account for you, it makes sense to compare the following: 

• Fees and charges. Check for monthly account fees, transaction charges, overdraft penalties, and fees for extra services

• Transaction limits. Ascertain if there are any limits on the number of transactions or free cash deposits you can make

• Online banking features. If possible, review the online banking platforms, mobile apps and other digital services you’ll be using

• Overdraft facility. If you expect to go overdrawn, take a look at the terms, interest rates and fees associated with the account’s overdraft facility 

If you need to pay in cash deposits, you should also choose a bank with a conveniently located local branch. You may also wish to consider its parking options if you’re likely to make frequent visits by car.