You can also save and invest your business money too (generating more income). If you accounts for sole trader want the full works, including multiple currencies scroll up or click the best business account for international payments. They’ve all got everything you need (and more), plus they’re super easy to use. Our recommendations above are all ones we recommend to our friends and family (those who are sole traders), and we also use some of the business accounts here at Nuts About Money. The best option is to open a business account, not only will your business transactions be separate, but they can also have tools and features to save you time, and grow your business.

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Mettle by NatWest is a free business account aimed at sole traders and small businesses. It’s free to send and receive money from UK bank accounts, however. You can also carry out key banking tasks at a local Post Office branch, though fees apply here, too. Depositing a cheque costs 50p, for instance, while taking cash out costs £1.50, plus 1.50% of the amount withdrawn. Revolut also offers fee-charging accounts that provide extra free transactions each month, and allow multiple users to be added to the account. The account could be a good option for companies that regularly do business abroad, since customers can hold and spend multiple currencies.

• On the other hand, if you’re a sole trader or in a general partnership, there is no legal obligation to have a separate business account.
• Unlike a limited company, which is a separate legal entity, there is no separation between your personal assets and those used for your business.
• When you start out, it’s a good idea to set up a separate business bank account so your personal and company finances are kept apart.
• Less than 1 in 10 knew what could happen if they did not pay their tax bill, and 1 in 50 thought nothing would happen to them if they did not pay.

Looking for the best alternative to a sole trader bank account?

Supporting more than a million businesses worldwide, Tide provides tools for invoice generation, expense management, accounting software integration, and administrative functions. Account holders benefit from FSCS security via Tide’s ClearBank partnership. Their usage-based pricing structure means you’re only charged small fees when making transactions, with premium plans available for additional functionality when your venture expands.

Does a sole trader need a business bank account?

A sole trader bank account is a type of account specifically designed for individuals who operate their own business as sole traders, this can technically be a personal bank account. A sole trader operates as an individual, assuming personal liability for gross vs net the business’s debts, while a limited company is a separate legal entity with its own liabilities. The finances for the business are not affiliated with your own personal accounts. Even if you’re not legally obliged to use a sole trader business bank account, there are plenty of perks to doing so. Nothing in this life is perfect, including banking as a sole trader. If you plan to open a sole trader business bank account, be aware of these potential pitfalls and do all you can to avoid falling into them.

tips to simplify accounting as a sole trader

As a legal entity, the money it generates must be kept separate from the personal accounts of the business owner or director. They usually come with monthly account fees, although nominal in many cases, and may offer discounts for international payments, cash or cheque deposits, or additional saving accounts. If you want to open a sole trader business bank online then you can do this in a matter of minutes, we’ll give you a few examples of how the process works below for two popular choices for sole traders.

Top fintech options with digital tools

Therefore, we have researched and reviewed the best business bank accounts for you, each offering different benefits. Business accounts often come with extra benefits like business checks and employee cards. For example, Bluevine has a high APY of 1.5% on balances up to $250,000. Relay has no balance or monthly fee, making it a strong choice QuickBooks ProAdvisor for self-employed people.

Business assets are found on the left half of the balance sheet while liabilities and shareholders’ equity show up on the correct side of the sole proprietorship balance sheet. As with most financial business decisions, there are some potential downsides to weigh up before opening a sole trader bank account. MoneyZoe is an independent financial services comparison website for pensions, investing, banking, and business accounts to help you save money. Compare pensions, savings, investments, and business accounts with Independent Finance Insights. Registering as a sole trader offers a quick, simple way to start a business with minimal paperwork and costs.

• First, we provide paid placements to advertisers to present their offers.
• Microsoft Dynamics GP has a management solution that offers robust financial capabilities alongside CRM, reporting, payroll, operations, and project accounting tools.
• However, setting up direct debits and standing orders is typically free.
• Many sole traders work long hours to build their business, which can negatively impact family life and personal wellbeing.
• Failing to register could result in a fine equal to 100% of the tax due, plus the tax itself.
• These include credit facilities, business support managers, integrated account software and free foreign transactions.

While the size of your income may be important, maximizing your profit also depends on your ability to limit your expenses, which is why we chose to focus on bank accounts that offer affordable fees. We also focused on banks with competitive interest rates to help you grow your savings. This guide will walk you through why a separate business account is essential for real estate sole proprietors and help you find the best checking accounts for your business in 2025. With that in mind, we’ve looked at modern business account options, these are all online, where you can manage everything either from a phone app, or website.