How Many Business Bank Accounts Should I Have?
Businesses are increasingly curious about finding better ways to manage their finances. Let’s delve into how many bank accounts a business should have.
As a business owner, you may ask yourself: how many bank accounts should I have for my business? The answer depends on your personal circumstances. If you have money to put aside in a savings account, or you want an account for small, daily expenses, you may consider having more than one business account.
Bank accounts for businesses come in a variety of forms, and as you’ll discover here, there’s great flexibility in the types that you can seek to match the needs of your business. Let’s explore how many bank accounts a business might need.
How many bank accounts should a business have?
When it comes to giving specific numbers, there isn’t actually a limit to how many business bank accounts you can or should have. Provided that your bank approves an application to open a business bank account each time, it should be possible to open as many as you require.
This means you can have as many business current and savings accounts as suits your specific business needs. No two businesses are the same, and it can be beneficial to be able to split your finances across multiple accounts, so you can keep a close eye on your money, for the different things you’ll use it for.
If you’re a sole trader, you might be wondering if you need a business bank account to begin with. Sole traders are not actually legally required to have one, and a personal business bank account could be suitable. The reason for this is that, by virtue of being a sole trader, all business and personal income is treated the same for tax purposes by HM Revenue and Customs (HMRC).
If you run a limited company, you will need a dedicated bank account for your business finances. This is because you’re required to keep your business and personal finances separate.
How many bank accounts does a business need?
At the bare minimum, you may need a business current account with basic functions such as the withdrawal and paying-in of money. This is a requirement for limited companies, as they cannot use personal accounts for business matters.
While it can be possible to function as a business relying on a basic personal current account (if you’re a sole trader), setting up a business current account can optimise your finances, as it helps simplify the way you pay tax, as well as enabling you to build up your profile as a legitimate business in its own right.
Crucially, opening a business current account helps start building up your business credit score. It can also make your business look more professional to customers, and could be useful if you want to apply for credit such as business loans in the future.
When people ask how many bank accounts a business can have, it’s important to consider what your requirements will be. For example, you may want to think about having a current account for your daily expenses plus a savings account for extra cash within the business that you can put aside for a later date.
Some business banking providers may not let you open more than one account per business. It’s worth checking whether this is the case with your current provider, if you have one, as you may need to look elsewhere to open another account.
Alternatively, you may consider switching to another provider that would allow you to open multiple accounts for your business.
» COMPARE: Switching your business bank account
Is it worth having multiple business bank accounts?
Having more than one bank account is a big responsibility, as you must frequently check in on each of your accounts to ensure everything is as expected.
Keep a particularly close eye on transactions so you can spot if there are unusual outgoings, whether it’s due to malicious activity or simply human error.
Even if you only have one business account, it’s important to have security measures in place to protect your money. If you want to take active measures to protect your business bank accounts from malicious activity, it makes sense to speak with your bank to see what security procedures they can put in place.
Having more than one bank account may suit your business, but it’s worth doing your research first to help make sure you make the right decision for your individual circumstances.
» COMPARE: Business bank accounts
Peter reports on a number of areas in the personal finance sector, with a particular interest in supporting businesses and individuals in the UK services industry. Read more
Kristina is a writer at NerdWallet. A recent graduate trading French for finance, she has experience creating content for student newspaper Cherwell and an edtech company. Read more