You might be in a position where you've been thinking about opening a separate bank account for your business transactions for a while, or it might be something that's never crossed your mind.
Either way, if you make money from your own business, whether that's through blogging or another form of self-employment, having a separate bank account can definitely come in handy.
DISCLAIMER: if your business is a limited company, you have to set up a separate bank account for it, as it's a separate entity from you.
Your business and personal transactions will be kept separate
This can make it easier for you to keep track of your business finances and stay on top of your bookkeeping.
It's annoying enough having to try and trace a payment you should have received without trawling through endless payments for Tesco, coffee and your gas bill, so having everything business related in a whole other account can save time.
A separate bank account will help you with your tax return
No, really. If your personal and business transactions are going in and coming out of the same account, it's going to be much harder to account for everything and work out what was for work and what wasn't, especially when months have passed. You might think something is obviously one or the other, but people forget, you know?
If you use one bank account for everything, you may also miss transactions that you can deduct from your tax bill, and no-one wants that.
Business bank accounts are expensive
If you're a sole trader (the sole owner of an unincorporated business) you may be better off financially using your personal account rather than a business account, if your bank allows it. Always check the terms and conditions of your bank account though - some personal accounts don't allow regular business transactions.
Why use a personal account if you can? Business accounts can be hella expensive. There are usually monthly fees and sometimes transaction fees, which are extra costs that small businesses just don't need.
If you do decide to open a business account, have a look round for good deals on monthly fees and interest rates - some banks offer free business banking for a set period, and you can always try and negotiate a cheaper rate with the bank. Always shop around for the best account for you and your business, don't just go with your current bank because they're familiar.
It might not be worth it
If your self-employment is part time, or more of a hobby, and you don't make many business related transactions, it may not be worth the hassle and expense of setting up a separate bank account just for those few transactions.
It's also worth noting that from personal experience, setting up a business account can be extremely time consuming and frustrating, and the bank may also want you to visit a branch in person to check out your identification and other documents. It's (hopefully) only a one-off inconvenience, but if you don't have to do it and it might not be of much benefit to your business, it's something to consider.
Just make sure you're keeping track of everything - I've got just the thing for you here if you need help with that.
It’s time to swap money stress for financial empowerment.
The Independent Girls Collective is a members-only platform to help smart women like you to take control of their finances and feel good about money.
As a member, you’ll get new courses, resources, live masterclasses and 1:1 coaching every month to help you manage your finances and provide the support you need to build a successful, fulfilling business that allows you to live the life you desire, as well as access to our supportive community of creative female entrepreneurs.