With over four million people in the UK now self-employed or part of the gig economy, understanding business banking is more important than ever. Whether it’s your main gig or a side hustle, separating personal and business finances can simplify your financial management and provide the clarity you so desperately need.
Understanding business bank accounts
A business bank account is your go-to for handling all your business finances. Unlike personal accounts, these are equipped with features tailored to business needs, such as invoicing, payroll services, and tax preparation tools. While totally free business banking is hard to come by, there are plenty of budget-friendly options that can provide great value for small business owners.
Consider a business bank account if…
– You operate a limited company: If your business is registered as a limited company, it’s legally distinct from you. This separation requires you to manage its finances independently, making a business bank account a must-have.
– You have substantial revenue: As your business blooms and earnings soar, managing finances through a personal account can feel like trying to fit a square peg into a round hole A business account can streamline financial management, making it easier to track cash flow and expenses.
You might not need a business bank account if…
– You are a sole trader or freelancer: If your business activities are not legally tangled to your personal life, such as those of a sole trader, freelancer, or contractor, using a personal account is perfectly fine. This includes professions like hairdressers, journalists, and gig workers.
– Gig economy workers: If you work in the gig economy with companies like Uber, TaskRabbit, or Deliveroo, a personal account usually does the trick since your hustle is not a separate legal entity.
Advantages of having a business bank account
Even if it’s not a legal must, having a business bank account can be a game-changer. It tidies up your bookkeeping, keeps your business and personal cash flows in separate lanes, and adds a touch of pro polish to your image for clients and partners alike.
Tip of the day: Don’t default to big banks for card payment solutions
While it might seem convenient to get card payment solutions from your business bank, this isn’t always the best choice. Big banks often treat card payment services as an add-on, leading to higher fees and less specialised support.
Opting for dedicated payment processors like Square or Stripe can save you cash, offer top-notch support, and come packed with features tailor-made for small businesses. Plus, they play nice with e-commerce platforms and offer A+ customer service.
Securing your business bank account is just the start!
But hey, don’t overlook the essentials: snagging pro emails, dedicated phone lines, and top-tier financial software are absolute game-changers. They’re like your business’s secret weapon for smooth sailing and looking super pro. So, invest in these must-haves, and watch your business take off! With these tools in your toolkit, you’ll be unstoppable, turning heads and sealing deals like a boss.