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January 12, 2021
When you’re starting your own business or if you’re a freelancer or small business owner, it’s tempting to use your personal bank account rather than opening a separate one. This is understandable, business bank accounts usually incur a cost and one of your main aims will be to keep your costs down; it’s also just the sort of thing that falls by the wayside with so many other aspects of your work to focus on. In the UK at least, there isn’t a legal requirement to have a separate account for your business unless you’ve registered it as a legal company. If that’s the case it’s a separate entity from you by law and needs a separate account.
But, there are very good reasons to open a business bank account even if you’re not required to. These range from the morale-boosting to the practical and we’ll walk you through them here. Don’t worry, there’s a business bank account for everybody. If you resist this type of account because you feel it may be too complicated or foreign as a banking experience, there are many that are as simple as a straight money-in, money-out account. If you don’t see the point of having a business account when a personal account does more or less the same thing, there are business accounts that can do a lot more – from issuing invoices and team cards to automating your accounting and helping with your tax return.
The three main reasons for opening a business account are:
Many new small businesses emerged during the current COVID-19 pandemic as people have been forced (or have simply had enough time) to find ways to turn their hobbies or side hustles into a main focus. Under these circumstances it can feel easier and more natural to maintain a casual relationship with your business because that’s how it started – but creating a separate place for you business finances is a good way to show yourself and your public that you’re truly committed. Dealing with a separate account and even a separate bank and banking experience for work purposes is a good way of sending yourself the message that you are taking the commitment seriously. For your customers or clients it signifies credibility and a reassurance that your business is here to stay.
You don’t want to be spending hours of your precious time sifting through your personal accounts to figure out how your business is doing. This can take up an inordinate amount of time. For example, if you rely on clients paying into your personal account, it’s up to you to keep tabs on who has paid and when. If you’re getting small amounts of money from lots of people at different times (if you’re a yoga teacher or Etsy seller, say) it’s too easy to lose out on payments this way. Business accounts with team management features can take the chaos out of invoicing and expenses and separate accounts ultimately significantly reduces the workload for yourself, your team and your accountant or auditor when it’s that time of year.
One of the main reasons individuals with independent businesses resist opening a business account is because there’s always a cost involved – usually a subscription fee type cost. This can feel unfair when there are good personal banking services with attractive features that are free or ‘nearly free’. But it’s worth considering that there are very competitive rate options on the market for business accounts and you will usually have the choice of starting at the lowest rate with decent services included. You can get a lot for very little: automated accounting tools, expense trackers, invoicing capabilities, team budgeting and team cards – to name a few. Add to this the cost saved in time and energy when trying to sort through your finances when the tax return is due and you have a strong argument for that business account fee being a saving in the long run.
wamo is a smart finances platform that is built to make business money management feel like a personal account service: easy, fast and a pleasure to use.
Once you’ve downloaded the wamo app – you can have a business account up and running in minutes. You’ll register your account by providing a few details about yourself (name, address, contact, etc.) and your business (trading country, address, contact, etc.). Then you’ll upload a proof of ID and take a selfie - which will be securely verified for your own protection. We’ll send you a link to sign-in to your new account and… that’s it. Given that this process can take days, weeks and even months through a regular bank, this is a game-changer already!
Opening a business account i an important step towards boosting your professional self-esteem and we’re here to make that step effortless. Take a look at wamo’s account packages, download the app or get in touch, today.