Opening a separate bank account for the business: good or bad idea?
Thread poster: Carmen Swanwick-Roa

Carmen Swanwick-Roa  Identity Verified
United Kingdom
Local time: 04:51
Member (2014)
Spanish to English
+ ...
Sep 9, 2014

Hi everyone, I made the jump to full-time translation earlier this year. At the moment, I get paid into my personal bank account and pay business expenses from my own wallet/bank account too.

I was wondering whether it was worth opening a bank account just for business use in order to keep personal and business income/expenses separate, or whether the extra charges would mean I'd be out of pocket for little gain. I'd also have to inform my clients through their various online forms and finance depts. which could be a bit of a kerfuffle.

Ideally I would like to keep everything separate, but is opening a business bank account the best way about it, or do you think it is better to just keep everything well organised and recorded?

(By the way, if it helps, I'm based in the UK and I'm currently doing my own accounting using online tools and spreadsheets but if things get more complicated in the future I would consider hiring an accountant)


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ATIL KAYHAN  Identity Verified
Turkey
Local time: 07:51
Member (2007)
Turkish to English
+ ...
A Simple Way Sep 9, 2014

I do not wear any accountant hat at the moment. I do not have a separate account for business, and I find this easier to manage. I do not know if, for example, having a separate bank account has any tax (dis)advantages in a particular country at all. I do not have too many business transactions to warrant a separate bank account. So, this makes it all simple for me.

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Sheila Wilson  Identity Verified
Spain
Local time: 04:51
Member (2007)
English
+ ...
You're talking of a separate personal account? Sep 9, 2014

As far as the bank is concerned, I believe a business account is very different, with high charges. I used to have two personal accounts, one personal personal and in joint names, and one in my name for my business. But they very soon got mixed as I'd need to buy something personal when all the spare cash was in the business account. In those days, transfers took a few days. In the end I closed the business one as it was just complicating my life. Now I just keep records of income and business expenses (that's needed for tax reasons anyway) and just spend, spend, spend.

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Daina Jauntirans  Identity Verified
Local time: 22:51
German to English
+ ...
Separate Sep 9, 2014

I have always had a separate account for my business, even when I was a sole proprietor (my business is now incorporated). The amount of the fees depends on the bank. Do whatever you find most convenient.

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Colin Smith  Identity Verified
France
Local time: 05:51
French to English
Business bank account Sep 9, 2014

Anybody running even the smallest business should run that business from a dedicated bank account. It's a basic discipline that will help you to stay in control. You need to know at a glance what you are drawing from the business and what your costs are. If you get to the point of needing an accountant they will not accept you if you run your business from your personal account.

There's no need for a "Business Account" as far as the bank is concerned. Just open a free personal account in your own name with a building society that offers you a cheque book, visa card and internet banking. When you need cash in your personal current account, transfers are now almost instant in the UK.


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Carmen Swanwick-Roa  Identity Verified
United Kingdom
Local time: 04:51
Member (2014)
Spanish to English
+ ...
TOPIC STARTER
Thanks everyone! Sep 9, 2014

Thank you all for the advice, I've decided that I will open a dedicated account for my business but I'll make sure to steer clear of the "business" accounts and go for a normal account.

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Nicole Coesel  Identity Verified
Netherlands
Local time: 05:51
Member (2012)
Dutch to English
+ ...
That might now work in every country Sep 9, 2014

I've tried to work with only one account when I first started out. Here, in the Netherlands, I fairly quickly received a telephone call from my bank indicating that they had noticed incoming payments from different companies, and that those payments were related to invoice numbers (payment references).
That was not alowed, and if I did not stop such practices immediately, they would close my account altogether.

They never had to go through the trouble to go that far ... I went to another bank. Yet I did open a business account because apparently here, in this country, privacy and customer service is do not matter all that much.

Good luck!


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Samuel Murray  Identity Verified
Netherlands
Local time: 05:51
Member (2006)
English to Afrikaans
+ ...
@Nicole Sep 9, 2014

Nicole Coesel wrote:
Here, in the Netherlands, I fairly quickly received a telephone call from my bank indicating that they had noticed incoming payments from different companies, and that those payments were related to invoice numbers (payment references). That was not alowed, and if I did not stop such practices immediately, they would close my account altogether.


I also live in the Netherlands, and when I opened my personal bank account and told them that I was a freelancer, I was told that I needed a separate bank account for my business and that it must be a "business" account. I've heard similar things elsewhere. At this time, my accounts are not strictly separate, since some of my payments still come into my personal account, and sometimes I'm forced to pay personal expenses from the business account, so for me having two separate accounts is simply a regulatory requirement.

In my previous country, South Africa, a "business" account is more expensive than a personal one, but there are no restrictions on using a personal account (which is cheaper) for business.

Having two accounts can be useful if you should suffer cashflow problems in the one account.


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Claire Cox
United Kingdom
Local time: 04:51
French to English
+ ...
Two personal accounts in the UK Sep 9, 2014

Hi Carmen,

I just use a separate personal account as my business account and have done since I first started freelancing 25 years ago. I've never had a problem with UK banks because of this, but then I invoice on a monthly basis, so there aren't huge amounts of transactions - a lot less than my household account at any rate! I then just transfer lump sums over to my personal account as I need them. My accountant was keen that I should have a separate business account too, as it means your affairs are much more transparent should there ever be a problem...

If you are likely to receive a lot of payments in from abroad, I heartily recommend First Direct for your "business" account. I used to bank with NatWest, who charged me £7 for every incoming Euro transaction (£1 if it was less than £100), whereas First Direct don't apply any charges at all - and only a nominal charge (I think it's £4) for outgoing transfers to the Eurozone. They also seem to use a better exchange rate for incoming transfers, although that's always hard to gauge unless you compare two transfers made to different banks on the same day and at the same time). The switch was easy (and I received £100 for switching, although that might not apply in your case if you need to keep your other account open) and their Customer Services are extremely friendly and helpful.

Good luck!


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Heinrich Pesch  Identity Verified
Finland
Local time: 06:51
Member (2003)
Finnish to German
+ ...
I use business account for all expenses Sep 9, 2014

I save the bills that come from business expenses in an envelope for each month and there is no problem at all keeping track of business related expenses for my book keeping. All my book keeping takes me half an hour each month.

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Darko Podnar  Identity Verified
Croatia
Local time: 05:51
Croatian to English
+ ...
Bank account Sep 9, 2014

I do not know what is the practice in the UK but I believe that sooner or later you would come into focus by the bank or tax authorities due to amounts received by foreign companies.

There should be no problem with occasional payments but regular payments could cause unnecessary problems with tax department.


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John Fossey  Identity Verified
Canada
Local time: 23:51
Member (2008)
French to English
Keep business funds separate Sep 9, 2014

Darko Podnar wrote:

I do not know what is the practice in the UK but I believe that sooner or later you would come into focus by the bank or tax authorities due to amounts received by foreign companies.

There should be no problem with occasional payments but regular payments could cause unnecessary problems with tax department.



Absolutely. I have had three tax audits over the years, I believe due to dealing in amounts from other countries. None of them were any major problem (in fact in one the tax department found they owed me $13!) but it would have been a mess if I had not had a separate bank account. Every foreign transaction had to be identified and justified.


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Samuel Murray  Identity Verified
Netherlands
Local time: 05:51
Member (2006)
English to Afrikaans
+ ...
@John Sep 10, 2014

John Fossey wrote:
I have had three tax audits over the years, I believe due to dealing in amounts from other countries. ... Every foreign transaction had to be identified and justified.


I don't have that problem in the Netherlands, but my South African bank sends me an e-mail every time I get a foreign payment, requesting me to write a detailled account of the purpose of the payment, before they release the funds into my account. I'm fortunate that they accept e-mail replies, and mostly I simply need to copy the information that they themselves give in the mail, but they do need that e-mail reply as confirmation (declaration) of the facts related to the transfer.


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