Should I Open a Business Bank Account?
If you are first starting your business it may seem an needless hindrance to worry about how to manage your company transactions if you are starting off small. In fact, it's sales that matter, correct?
However , it will be much simpler in the long run in case you separate your personal finances from the ones from your business.
When you look back with time and need to analyse income plus expenditure, it is much easier knowing that you simply have to anaylse the transactions in a single separate bank account. It certainly causes it to be less of a chore.
If you don't individual business and personal items then you provide yourself an extra job in that you must identify and analyse each product into business or personal before you assess your business cash flow. In short a person give yourself an extra job.
Another to separating business transactions arrives if you decide to give the bookkeeping to somebody else at a later date. That person would have a much tougher time recognising which items had been relevant business transactions because they are less familiar with your transactions as you will be.
This would mean they would spend more time checking out transactions instead of carrying out the evaluation. This of course would mean higher fees, not to mention a lot more questions to you concerning explanations of uncertain items.
Lastly, you should be aware that the tax man requires a dim view when you mix company and personal items. After all, is it a company venture or merely a hobby you are running?
You risk higher taxes assessments if it is not clear what products are legitimate business expenses. It really is silly to invite trouble when you are able easily prove that you are in control of your company and have the relevant facts to hand. Individual bank accounts and records will accomplish this for you.
Business bank account charges is definitely an issue, but currently in the UK there are a variety of banks, particularly those working online accounts, that will let you bank free of charge.
There are usually conditions however , specifically trying to get as many of your transactions produced by direct transfer. It is just a matter associated with shopping around for the best deal.
Please don't believe that you have to use the same bank since the one that runs your personal account. It really is worth investigating if they will let you possess a special deal, but don't really feel beholden to take it. Competition is definitely rife in the banking industry with a little persistence you should be able to protected a favourable deal.
A final phrase, if you do opt to open a separate bank-account, then please make sure you put all of the business items through it. You can easily pay for an item out of your personal accounts and then forget to allocate it in order to business expenditure.
Don't forget that the item will probably be tax deductible and you make sure it is included in the accounts for your company.