Why you need a business account for your new business

When you set up a new business one of the first things that you need to do is set up some type of business bank account in order to separate your personal finances from your business finances.  While this may be intimidating to a small business since it will seem as if your personal finances are a large part of the investment that will keep your small business afloat, it is necessary for a variety of different reasons.

The following will help to point out the different between a business bank account and a current account so that you can judge which is right for you.

First off, if your business is any type of incorporated business such as a LLP or a limited company then you have to have a business bank account that is separate from your own personal account. It is not an option for tax and law regulations, but if you are a partnership or a sole trader then there is a bit more flexibility when it comes to choosing what type of account to open although there are still a few things that you may want to keep in mind.

If you simply want an account that will allow you to deposit and withdraw money with the ability to write cheques, access an overdraft, receive a cashpoint card, and buy goods with the debit card then chances are all you will need to do is open a current account.

Of course, you will need to fall into the second category of business owners in order to make use of this type of account, but essentially it will just be a normal banking account that you set up primarily for use of your business. You can have joint current accounts as well so that other people can access the funds is need be.

On the other hand, if you fall into the category where you need a business bank account then you will have to look a little farther because while anyone can basically open up a current account, not everyone can open a business bank account.

Most business accounts will not offer very high interest rates at all, but they will help when it comes to tax matters and almost all of the high street banks will offer some free services to businesses that open up an account with them. For instance, some banks offer things such as free data back-up, free credit control service, and even some free business seminars.

One of the advantages to choosing a business bank account is that usually the costs of banking are fixed, but they may be a bit higher than the costs of a current account depending on how many transactions you are going to complete monthly.

The main difference is that a current account will usually be opened under a person’s name, while the business account will be open under the business name which in the future will change liability when it comes to business assets and personal assets and could act as a potential protection in certain circumstances.