34 Replies to “Do I need a business bank account?”

  1. Hi,

    I’ve always kept separate bank accounts for business and personal (and separate credit cards too, makes book keeping so much easier!) Last September however, I decided that I was going to be changing how I do business so have taken on a credit card machine which can be taken out to shows with me and it makes telephone ordering for customers much easier.
    In the past I had been able, with a bit of sweet talking and creeping to get this set up with a current bank account but that couldn’t be done any more, I HAD to open a business account…
    As I’m a member of the FSB (Federation of Small Businesses), I was entitled to free business banking with the co-op (although I pay an annual subscription to be a member of the FSB)

    The set up isn’t ideal though. I have a current account I use for business, which is with the same bank as my personal account, then I have my co-op business account where all credit and debit cards are paid into. Then I have my paypal account… Book keeping now takes my longer as I try to show all 3 bank account transactions in each month on my excel spreadsheets…

    I’ll try and streamline it all shortly, although the layout and use of the co-op online banking isn’t as user friendly as my high street bank, but perhaps this is another factor for people looking at bank accounts… will they be wanted to set up credit card facility for customers at some point?

    I also have to admit, I’d never considered Santander for my business banking, but I’d be interested to know how people found it?

    Thanks for a great blog post though Helen! :0)


    1. Thanks Nikki, lots of really useful information there. I think you’re right, there’s no ideal banking solution – you need to look at what your needs are and find the best solution to fit them.

      I’ve heard from several people now that the benefits you get from the Federation of Small Business more than pay for the subscription fee, so it’s well worth checking that out.

      Much as I love Paypal, I agree that it ends up being basically another bank account to manage. And if you take lots of relatively small payments (rather than fewer, bigger payments) bookkeeping can be a pain. Have you thought about getting an online accounting service like Kashflow (http://www.kashflow.com) to streamline it all?

  2. Thanks for the post Helen, I agree with all you say (including your’s and Nikki’s comments) except I personally would be cautious about recommending Santander.

    They are great at personal banking, but I have had several clients complain about their business banking service. Sometimes, you get what you pay for!

    1. Toni, thanks for your comments. It’s really good to hear I’ve got it all right from an accountant! I did a search around the business forums for some feedback on Santander’s account before I wrote this post. I agree, it was mixed, with some saying they’d had a bad experience and others were happy with theirs. I still think it depends on the needs of your business. Many mums reading BPB are just starting out, they are working part time on the tightest of budgets and every penny counts. If they don’t have that many requirements from a bank account they might be happy to try Santander even with the mixed reviews because keeping their costs ultra-low is a fair trade-off for them. For a business with a much bigger turnover making greater demands of its bank, it might make sense to go with a different bank account.

  3. Hi Helen, I have been using Santander for my small chocolate business for 3 years now without any problems and have since set up a 2nd account for the Mums Business Directory. I did compare Barclays but as I was already a Santander customer I decided to stick with them.
    My Business Bank Manager has been there when I needed him and although their service is not in branch if i have run out of paying in envelopes they have been happy to help.
    I mainly use my account to amalgamate payments from Paypal, online Bacs payments and customers cheques which I pay in via the hole in the wall.
    I also use the online computer service regularly without a glitch! You receive a paying in book, cheque book, visa card and monthly statements and there are currently NO charges.
    Recently having spoken to Amy at Amy Taylor Accountancy I believe the way to go would be to link up with Xero accountancy system and then all payments can be processed including Paypal at the click of a button! Emma

  4. I have always used Barclays for my business banking. I run my business as a limited company so I have to have a business account. I haven’t had any problems using them and the internet banking has also been good and easy to use but I do feel that the fees they charge have gone up too much.

    I had looked into Alliance & Leicester free banking but didn’t get round to opening an account before Santander took them over. However, my experience of Santander business banking (through a club I’m involved in) isn’t good. We used to have an Alliance & Leicester account and there seems to have been nothing but problems since they switched to Santander, especially with the internet banking side of things. Maybe the problems people are having are because they also had an A&L account that changed rather than just having a Santander account?

  5. I thought I’d add some of our experiences using Santander. It has so far been fairly straightforward apart from the one time there was a mistake in which a transaction happened twice (their mistake). I wrote in to complain and although did not manage to elicit an apology, was offered £25 which was debited to the account directly.
    They have now started same day transactions which is great (previously it used to be 3 working days). Other than that, we have not required any ‘support’ such as legal advice or needed to speak with a business manager which is offered at some of the other banks that charge a fee.
    There is a limit on the number of cheques you can pay-in (100 per month, I believe) although I think (not 100% sure) that there is no limit on electronic transactions, which most of our clients have started moving on to.
    I would generally recommend them if you have no greater needs other than directly having a bank account to work from online. We also have a linked Business Saver account which is handy and has higher interest rates than the standard Business Account.
    I’m happy to answer any further questions if anyone needs more help.

  6. can any one help ?
    i really would like to start my own dog walking business i have took redundancy from
    work and would not need to borrow any money
    i have been to my bank hsbc and because i have bad credit they will not let
    me open an account
    can you help with this
    thank you x

  7. Sorry Paula, I just re-read your comment and I think I misunderstood. All I can suggest is to shop around for a business bank account as there are quite a few to choose from and quite a few of those have free banking for at least a year. Failing that I guess you don’t have much choice but to use your personal account (assuming you’re a sole trader)?

  8. Most building societies will let you open a passbook style account named Paula trading as Dog Walker extraordinaire as there is no risk to them.
    This is not ideal as you wont get a debit card/internet banking/overdraft facility but it will be good enough to bank customers cheques etc which may be enough to get you started and while you get your credit rating sorted.
    Using a personal account is an option, but you will have to remind customers to make cheques to you personally. This will also save bank charges long term but the banks will get upset if they find out you are using it for business. If you are planning on a low volume of transactions then the reality is that this is the best option.
    If you need access to a “friendly” bank manager, msg me on skype (tonimhunter) and I will send you some contact details.
    All the best with you new venture Paula
    Kind Regards, Toni

  9. Hi, This might be a bit naughty, but I resent paying for the bank to take a cheque, or charging me to withdraw money.

    Can I avoid it by paying cheques into my personal account and then transferring funds for free via online banking? Within the first 2 weeks of my barclays business account, I’ve used 5 cheques, withdrawn £800 and have been charged £16 inclusive of the £5.50 monthly account charge.

    1. I would think your bank wouldn’t be too happy if they found out 🙂 It’s probably best to talk with an accountant to be sure, though.

  10. My partner, Joe, and I had an appointment with HSBC today to set up another personal account. We have one joint account that my salary goes in to and the bills go out of and we wanted a seperate one for my partners weekly pay (by cheque normally) to go into which would be our ‘spending’ money. When asked what job Joe did we said he was a sub contractor (self employed) and they said that by law we would have to set up a business account. Under the Inland Revenue scheme his tax is deducted before he is paid so I don’t understand why we have to have a business account. Non of the other subbies use a business account.
    Any advice would be gratefully received.

  11. Hi Jennifer

    You mention that your partner is classed as a self employed individual. As Helen points out in her blog, it is always best practice to keep your business transactions separate from your personal ones and having a separate bank account is the best way to achieve this, so I would concur with everything Helen has written. In all my 25 years since starting off as a Chartered Certified Accountant, I have never come across such a statement made by HSBC. Perhaps they were assuming your partner trades through a limited company, which would therefore require a business account?

    I would point out though that the deduction of CIS tax at source does not change the type of bank account to use. The deduction is applied to all subcontractors, which fall within the construction industry scheme (CIS).

    For a more detailed guide of what business records HMRC expects self employed individuals to keep, please visit http://www.hmrc.gov.uk/sa/rec-keep-self-emp.htm

    If you require any further help, please visit our website http://www.freemanco.net for our contact details.

    Jonathan Freeman FCCA

  12. I have enjoyed ‘free for life’ business banking with (Abbey) Santander from 2008 until now. They have just informed me that, from November, they will be charging me £7.50/month for my business current account.
    I have rang them to no avail and can’t find a bank that offers free current accounts (unless I subscribe to the FSB). so I shall probably open a personal account and use that for the business as I have a small turnover.

  13. As per last message, I am with Santander and not happy with the £7.50 charge as from Nov. However, I have investigated opening a personal account in another bank. ie Barclays, but they tell me that as I am self employed they would prefer me to open a business account and not run the business through their personal account. My turnover is very small. They tell me that it would probably be very difficult for me to approach any bank being self employed and have success in this…………am i therefore doomed to the £7.50/ month charge ?

  14. David and Barry, as far as I know, that banks want you to open a business account if you’re self employed and the only way around this is to open a personal account and not tell them that you’re using it for business. I’m not recommending you do this if it goes against the bank’s terms and conditions 🙂 but I know it is something that some small-earning self employed people do (until they get found out!) The reason personal accounts are free (as far as I know) is because they are ‘loss leaders’ for other products i.e. if you have a personal account there’s a good chance your bank can also sell you a mortgage, insurance etc. Perhaps even a business account too.
    The only way I can think of to have free banking without breaking any rules is to shop around for a business bank account with a no-charge introductory period? NatWest are currently offering 2 years free banking if you’ve been trading for less than a year. If we have any accountants listening in who can add any other suggestions please do feel free to add your comments 🙂

    1. As with David and Barry, I too have had a business account with Santander and have also been advised of £7.50 monthly charges “later this year”. If there are any updates on free business banking for small turn-over businesses I should be happy to hear about them. I have been operating a business account since 2006 and would not be eligible for the Natwest free banking account.

  15. Just seen news items that Santander has back-tracked on the free for ever business banking – well done to all those who have protested!

  16. I wanted to use a personal bank account to run a business but the bank told me I can’t. I must use a business account. I contacted the Skipton CAB and they said there is no law which prevents someone from using a personal account for a business account. So what’s the problem with the banks?

  17. Wow that was strange. I just wrote an incredibly
    long comment but after I clicked submit my comment didn’t
    appear. Grrrr… well I’m not writing all that over again.
    Regardless, just wanted to say wonderful blog!

  18. I am a Syrian citizen and I have a small company in Syria, after the current events in Syria, my bank in UK told me that from now on I couldn’t use my personal account for business and also I could not open the business account because of UK sanctions on Syrian companies, the field of my business trade is hospital equipment so, my question here is there a British law which prevents me from using a personal account for a business and is there a suction on Syrian companies which deal with the health sector to open an business account in UK. I Appreciate your answer.

    1. Hi there and sorry for the delay, I’m afraid your comment was sent to the spam folder. This is a complex situation and I don’t feel qualified to advise, I’m afraid. I really recommend you speak to a British accountant.

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