Separating business and personal money
Tags: freelancing, career
Published: 2019-09-02 11:50:47

I’ve been self-employed for nearly six years, but I didn’t set up a business bank account until earlier this year. 

There were plenty of reasons why I didn’t use one:

* **They’re not obligatory**
As a sole trader, it’s legal to run a cash-only basis that doesn’t have a bank account. I’m not advocating this, but I saw a separate bank account as extra admin.

* **Cost**
When I became self-employed, business accounts were expensive and my income fluctuated greatly. There are still plenty of expensive business accounts about, but plenty of newer banks offer free accounts with generous exchange rates. 

* **Complexity** 
As I’d only ever used my personal account, I wasn’t sure how to consolidate everything in my accounting software and claim things like working from home expenses.

* **Status quo**
My system had worked for a long time and clients had my existing banking details: 
I didn’t want to upset the apple cart.

* **Business name**
This might seem trivial, but I hadn’t decided if I’d stick with my business name — using a personal account let me keep things flexible.

## Getting serious

Despite my previous inertia, I decided to start looking into business bank accounts. I felt now was the time to set this up for a range of reasons:

* A business bank account is the first step to creating some separation between my money and the business’ money. 
* It looks more professional
* Since setting up bank feeds to my account software, I was more comfortable with how everything could be consolidated
* Setting up a business bank account is cheaper and easier than ever
* I’d learned that most personal accounts don’t allow for business use in T&Cs. 

## Choosing a provider

There are lots of business bank accounts on the market, many of which are free to set up. To whittle down the options, I created a set of criteria. 

I wanted an account that:

* Is an actual bank!*
* Is free or very cheap
* Have an app that notified of payments received
* Integrate with my accounting software
* Offer phone and email support

_* NB: Many newer banks aren’t actually banks, so don’t offer the FSCS protection if the bank was to go under._

## The results

After opening the account, I emailed my clients to let them know about the change of emails. Then began the unenviable task of changing the payment details for the apps, services and subscriptions I use in my business.

This turns out to be a good opportunity to cull some services I was no longer using. Emailing my clients also offered the perfect chance to introduce GoCardless for recurring payments.

Since opening this account, I’ve noticed a few benefits. As my business’ money is now separate, it’s easier to keep track of finances, save money for business projects I might want to invest in and get an idea of the cash flow at a glance.

It’s also much quicker to submit my tax returns. There’s still the occasional personal expense, but now I can quickly run through income and expenses from a single account.

Despite the time changing payment details and direct debits, opening a separate business bank account has been a worthwhile exercise. In the grand scheme of thing, a business bank account offers small benefits, but it’s absolutely worth it.