Why should I open a business bank account?
If you are setting your business up as a limited company, you are required by law to have a dedicated business bank account. It is important to note, that setting up a separate business account isn’t compulsory for every commercial business owner or sole trader. However, business accounts do have a variety of advantages that will benefit every business over both the short and long term.
Why do I need a business bank account?
Although it might seem unnecessary in the early stages of running a business, setting up a dedicated bank account for your business will remove many of the everyday difficulties that can make maintaining accurate accounts such a complicated and time-consuming task. In addition to a variety of other tools and services, by opening a business bank account, you will find it easy to keep track of:
- Overall available balances
- Money owed to the business
- Up-to-date employee payroll information
- Money your business owes to any creditors
Selecting the right business account to suit your company needs will allow you to streamline your entire accounting process. Make sure you do your research as services and charges will vary between different business bank accounts.
Here we take a closer look at some of the core benefits of opening a business bank account for your company.
Keep your business transactions separate from your personal finances
Sole trader or commercial business owners might prefer to integrate business accounts with personal finances. Although initially, this might seem like a viable option, there are various tax implications to consider when mixing finances. Ensuring that certain areas of your financial life are kept separate will make it far easier when it comes to sorting taxes and providing documentation to HMRC.
Receive credit and debit card payments
Whether your customers or clients want to pay using a debit or business credit card, your business bank account will be able to facilitate and process these payments seamlessly and efficiently. The ability to accept a variety of payments aids businesses in attracting new customers and makes payments easier for existing clients as well.
Many business bank accounts also allow companies to accept foreign card payments and currency transactions. This ensures that engaging in business with customers overseas is hassle-free and efficient.
Process salary payments
Ensuring that payroll processes run smoothly and seamlessly is an integral part of the day-to-day functions of a business. Business bank accounts allow payroll teams to process and deliver salary payments on time every month accurately.
An added layer of professionalism
Having a dedicated business account demonstrates that a business is secure and trustworthy. This added layer of professionalism helps companies to retain existing customers and, importantly, attract new clients to support the future growth of the business.
Clear and accurate bookkeeping
When the time comes to file annual tax returns, having a dedicated business bank account will make it much more precise and easier for accountants, or yourself, to process claims for business expenses.
Easier tax reporting
If personal and business transactions are processed through the one account, completing a tax return will be far more complicated and time-consuming. Running a dedicated account will make it easier to track business cash flow accurately.
Leverage the unique benefits of your chosen business account
Thorough research before deciding on a business bank account can unveil highly valuable add-ons. Many banks provide introductory offers, meaning businesses can benefit from free banking for a limited time, have access to competitive interest rates, or include in-branch business advisors.
In addition to ensuring that business finances are clear and organised, opening a dedicated business bank account can make a significant contribution to the overall success of the business.
There are now a variety of smart tech solutions that can be used to simplify keeping track of finances. Soldo, for example, is an innovative expense management system that can be used in collaboration with the services offered by your chosen business bank account to take full control of company-wide spending.
Managers can set clear and fully customisable budgets. The entire expense management process is simplified by delivering real-time reporting for both finance teams and individual employees.
Whichever way you choose to manage your company spending, the financial health of your business should always remain a top priority.