Bank accounts

It might be a surprise to learn that – as a sole trader – it’s not a legal requirement to have a dedicated bank account.

I didn’t have one for years because it seemed like an unnecessary complication. When I started freelancing, most banks charged for business accounts, but these days there are lots of free options.

The main benefit of a separate account is that everything in there is business-related.

That may not sound important, but if your personal and business expenses run through the same account things get complicated quickly. At tax-time, you may have thousands of transactions to trawl through.

Another consideration is that using a personal account for business transactions is against many bank’s terms and conditions.

More thoughts on keeping business and personal finances separate in this article.

Tax, Pensions & Accounting sponsor

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Penfold

Our friends at Penfold provide the self-employed (whether you’re a freelancer or Limited Company) with a completely digital, FSCS-protected & FCA-regulated pension: 

  • It’s simple to use & completely flexible – pause your contributions or make one-off top-ups any time you like. 
  • HMRC adds £25 for every £100 you pay in...or more for higher earners!
  • LTD companies can deduct contributions from their tax bill
  • Work Notes readers get £25 in their pension by using the referral link (or referral code: Work Notes)!

Pensions are a long term investment, and your capital is at risk.