Can I use my personal bank account for business?

Is it ok to use my own

 bank account

for business?

If you are reading this, then you are likely to either just be planning your new business, in which case that is amazing! Or you will have already started and you are now making some sales and wondering whether you should maybe be using a bank account other than your own. 

I'm going to give you a few quick tips to help you figure out what's best.

the short answer... 

Yes, you can use your own personal bank account for business when you are just getting started. But this will only work for you in the early days.

A business bank account is what you really need. It will keep your finances separate and save a whole heap of confusion (and time). Read on to see why that is and what you can do to make things so much easier.


I'm Naomi

I help people start businesses simply and without stress.

I'm sharing the start up info you need, so it's easy to understand & implement.

If you have a new business question you'd like help with, you can reach out to us here.

using your own account

is easy to start with!

Using your own bank account when you first start your business always seems like the easiest option to take. You don't need to set anything up because you already have an account, and so you can just get started. It definitely feels like it's the right thing to do. And if you are just testing your business idea then this is actually a good option.

When you just need to buy a few things for your business, it's easy to keep track of everything you spend. In the very early days of setting up this is what most people do. 

The difficulty comes when either your costs increase and you are making regular payments, or when you start making sales. When money's coming in and going out, it makes it much harder to work out what is business related and what is personal. Plus it takes a lot of time, which I'm sure you would rather be spending doing something else.

When you are just testing your business idea and getting it set up, using your personal bank account is ok. But you need to be diligent about keeping a record of what you are spending and what is coming in.

Reasons why you shouldn't use your personal bank account for business.

So far I've talked about the ease of using your own personal bank account when you are just starting up your business.

Next I'm going to give you 5 reasons why you shouldn't be using your personal bank account for business. And why having a dedicated business account is a better option, especially as you grow your business.

You'll also see that using your personal bank account for business is not always possible. And if you are in the UK then there are some instances that require you to keep your finances separate, so definitely keep reading.

If you have any questions about any of this, you can drop us an email. Or leave a comment and someone will always respond.

Reason #1

keeping records will become a nightmare 

However you set up your business, one thing you need to do is keep records. That means keeping a spreadsheet of what goes in and comes out, and regularly reviewing your bank account.

If you find this easy, and you have the time to go through your bank account and maintain these records, then definitely in the early days of your business more than likely you will be okay using your personal account. But this will get more difficult! You will spend a lot of time trawling through bank statements and receipts, trying to make sense of it all. It can make you feel really unorganised, and can be quite stressful.

But if you have decided to move forward with your business, aim to get a business bank account ASAP.

Reason #2

It's good practice to keep your finances separate

It's so much easier when you keep your business account separate from your personal bank account. You will spend less time trying to keep track of what is a business expense and what is personal. That alone can reduce stress levels hugely. 

When you have a business bank account, it is much easier to see how much is coming in and going out. You will also be able to keep track of your cash flow and know exactly how much money is available to you at any given time. 

In some instances there are requirements where you do need to keep your finances separate. For example, if you decide to set up a Limited Company (Ltd), then you operate your business as a completely separate entity from yourself. It would make no sense, and be very confusing to keep using your personal account. If you're thinking of setting up Limited Company, this is another reason why you should get a business bank account.

When you keep your finances separate, you also create really good accounting habits. This can help your business in so many ways. If you want your business to grow and succeed (who doesn't?), then at some point in the future you will undoubtably need to get a business account anyway. So why not make it easy on yourself, get one now, and get into these good habits from the start!

Reason #3

A Business Bank Account can help you be more profitable

This might sound odd but bear with me, it will all make sense.

You need to know how much money you're spending, and how much you're making. Without being able to see this clearly, you will not be able to work out if your business is profitable. And by that I mean having money leftover, after all of your costs and time have been accounted for, as well as any tax that will need to be paid. 

When you can see all of this clearly, you can start to work out where you can make savings, which will make you more profitable. But you'll also see something else. You can see just how often money comes in, how much, and where it's coming from. Seeing money come in is exciting, and you will want to see more of it. So what do you do? You start playing around with numbers and ideas, working out all the ways you can increase sales. And that increases your profit!

Reason #4

End Of Year Taxes Are Much Easier With A Business Bank Account

If you are making money in your business, then you are going to need to do end of year taxes.

In the UK, this means that if you have made over £1,000 in the last year, then you will need to register your business for tax purposes. You can find out more about what that means in this blog post.

This means that you will need to keep an accurate log of all your business related finances. While it's not necessary, you will save lot of time, and it will be much easier to do with a business account. 

And when you start out with a business account, everything is in one place. If you decide to get a business bank account halfway through the year, you'll be working out your taxes using 2 bank accounts, which is not the easiest way to do things. 

Reason #5

If you register for VAT you must have a business bank account

Once you register for VAT then you definitely need to have a dedicated bank account for business. You cannot do your VAT returns without one, and HMRC will require you to have one.

Why is this an issue if you are just starting your business? Because as soon as your business makes £85,000 in sales, then you are required by UK law to register for VAT. Are you thinking that this figure doesn't apply to you? Well, you can also voluntarily register for VAT at any time below this threshold. This is especially helpful if you spend a lot on buying products and services for your business, because you can claim all the VAT back. And it can add up!

Even if you don't want to register voluntarily just yet, if you think that your turnover will reach £85,000 in the next year, then I highly recommend not waiting, and getting yourself a business bank account now. It will just make things much easier for you.

what is the solution

for where you are right now?

After reading this I hope you have a bit more clarity on when it's ok to use your own, and when it's better to get a separate bank account for business.

The best way for you to make a decision really is to look at where you are with your business right now. If you are right at the start of your new business journey and you're not ready to make any sales yet, then you really will be able to manage with your personal account. Remember to keep those records though!

But if you are already making sales, spending on purchases, and your business is starting to grow, then I highly recommend looking for a business bank account.

“The best way for you to make a decision is to look at where you are with your business right now”

Is it hard to set up? No! It's actually very easy. Once you've found a business account that  suits your needs, you'll answer a few questions and you are on your way to getting set up!

I'll be publishing several more posts on business banking for start ups shortly, so please make sure you are subscribed to the mailing list. I send out a weekly email with all the latest posts so you don't miss them, as well as tips to help you start and grow your business. 

here's to your massive success!

get up & running fast!

with The Simple Start-up Strategy™ 

This new training brings you all the "need to know" aspects to building your business with confidence. No more trawling websites piecing together information, trying to work it all out. You'll know what you need to do and when, and you'll actually get your business set up! 

You'll validate your business idea & build your solid foundations, so you set your business up the RIGHT way. And then you'll follow a series of easy lessons, which walk you through all the start up essentials (naming your business, setting up your emails, budgeting, branding & lots more). And as a bonus there are some great freebies in there too.

The Simple Start Up Strategy is achievable, affordable, and it's available now!

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Everyone has an opinion when you want to start a business!

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