Whether you are starting out as a sole trader or setting up a limited company, one thing you cannot overlook is a bank account specifically for your business activity.
Many people who are new to business make the mistake of just putting their business transactions through their personal account rather than through a business bank account.
The thinking is that because there are not many transactions, it isn’t worth the hassle of setting up a new bank account. However, having a separate bank account will make your life so much easier when it comes to working out your tax liability and managing your cashflow.
As a sole trader, you technically only really need to open a separate personal bank account. However, most personal accounts come with the caveat that they are “not for business use”. This is because they do not offer the same level of features and, unlike business bank accounts, they are often offered free of charge.
So, this means that even sole traders tend to need to open a business bank account.
If you have a limited company then a business bank account is an absolute necessity since that is the only way you can open a bank account in the name of your company. In fact, it is actually a legal requirement that a limited company has a business bank account so your options really are limited.
The fees for a business bank account do vary, but on the whole, most of the high street banks offer a similar level of service for a similar fee. It’s simply a case of choosing which one you are most comfortable with.
Barclays Business Bank Accounts
One bank that is always worth considering as a startup business is Barclays as they have dedicated a lot of time towards making themselves ‘startup friendly’ and probably offer more support and advice than any of the other major banks.
Applying for a business bank account is not too different to applying for a personal bank account.
You will need all the same personal details for each director of business as you would need for a personal account, and in addition, you will need details of your business.
These details will include things such as the name and address, legal status, nature of business, anticipated turnover, and formation details. Whilst it may sound a little complex it really is not too bad and shouldn’t take much longer than 30 minutes to apply for. The application, in the case of Barclays can be done via their website.
The Quickest & Easiest Way To Apply
If you find the idea of completing business bank account application forms a little daunting then you will be pleased to hear there is a quicker and much easier way to apply.
Many of the company formation agents such as 1st Formations do in fact offer ‘Fast Track’ Barclays business bank account applications.
If you are forming your company through them you have the chance to add it during the formation process and they complete 90% of the information for you.
However, if you have already set up a limited company it’s not too late, you can still use formation agents like SetupaCompany to submit your business bank account application, using the steps below:
- Register for a free account by clicking here
- From the dashboard menu select ‘Companies’ and then ‘Import Company via Auth Code’
- Then enter in your company registration number and authentication code (the same code you use to register for WebFiling)
- Confirm the details and the company will be imported to your dashboard
- Click on ‘Details’ alongside the company you just imported
- Select the ‘Shop’ tab and click on ‘Add’ alongside ‘FastTrack Barclays Bank Account’
- Then just follow the on-screen instructions to submit the necessary details
The advantage of doing it this way is that not only is the application process much simpler and easy-to-follow (partly because most of the details needed will be automatically imported from Companies House for you), but applications done in this way also seem to be given some sort of priority – hence the ‘FastTrack’ aspect.
Once you have setup your business bank account, the next step will be to establish some basic bookkeeping procedures so that you can record transactions accurately and save yourself time when it comes to annual accounting and tax returns.