Compare Best Business Bank Accounts

From easier bookkeeping to accessing business banking services – we unravel all pros, cons and alternatives to a sole trader business bank account. Bank of America’s Business Advantage account is often recommended for its comprehensive services. A sole trader business bank account is not legally necessary, but it’s the smart way to manage money, simplify taxes, and build credibility. With options ranging from traditional banks to modern digital providers, sole traders can choose the account that best fits their needs and growth plans. Business analysts may advise sole traders to form a limited company in order to access greater levels of financing, for example for expansion plans.

Best business account for international payments

A separate account creates a clear division between personal and business finances, simplifies tax reporting, and enhances your professional image with clients. Fortunately, setting up a sole trader bank account is a quick and straightforward process. Many banks, particularly digital providers, allow you to apply online in a matter of minutes. The application typically requires basic personal and business details, such as proof of identity and a business address. Unlike a limited company, you don’t need to provide registration documents from Companies House, which streamlines the process even further. It’s not a legal requirement for sole traders to operate a separate business bank account.

How much tax does a sole trader pay?

Many sole traders work long hours to build their business, which can negatively impact family life and personal wellbeing. Banks often prefer trial balance the greater financial transparency of limited companies and may offer less favorable loan terms to sole traders. Additionally, sole traders cannot issue shares or securities to attract investment, and some government funding schemes exclude sole traders. Some clients and suppliers view sole traders as smaller, less established, and less professional than limited companies.

• Bear in mind that MTD for ITSA will only affect sole traders who make more than £50,000 per year.
• For small businesses with minimal risk of building significant debts, this arrangement often works well.
• Moreover, the professional image a separate account projects can enhance your credibility with lenders, potentially easing the path to securing business loans, thereby supporting your credit profile.
• This is different than company owners who enjoy corporate tax rates.

Revolut Pro— Tailor-made business account for sole traders

There is no one best bank account for sole traders as it really depends on what you want and need. There are also some free business accounts, like Starling, that are completely free forever and high street banks usually offer free banking periods, while others just charge for what you use. Sole traders need a basic set of accounts, including an income statement and a balance sheet. These documents provide a snapshot of the business’s financial health. Setting up alone does come with its challenges, and getting your head around the amount of tax you need to pay can be complicated.

How much do sole trader business accounts cost to open and run?

• You’re not actually obliged to open a separate business bank account as a sole trader.
• Opening a free business account from the start can ensure you don’t run into unexpected account issues.
• Long gone are the days where business accounts can take weeks to open.
• One of the first things you need to organise when starting a business is a dedicated sole trader bank account.
• They offer feature-rich apps that many traditional banks lack, and they don’t have physical branches.
• It is your responsibility to inform HMRC that you have started to trade and to file a tax return under self-assessment.

Lots of sole traders appoint Gorilla because they found they were spending much too long balancing the books, which was taking away from the time they needed to spend on building their business. The other option is to set up as a limited company, in which there are also positives and negatives of. As a limited company, your take home pay can often be higher, however there is much more admin behind the scenes to sort out.

Sole traders in the US can open either a Wise personal or business account, depending on which they prefer. Neither Atomic Invest nor Atomic Brokerage, nor any of their affiliates is a bank. Investments in securities are Not FDIC insured, Not Bank Guaranteed, and May Lose Value. Before investing, consider your investment objectives and the fees and expenses charged. Brokerage services for Atomic are provided by Atomic Brokerage LLC, a registered broker-dealer and member of QuickBooks ProAdvisor FINRA and SIPC and an affiliate of Atomic, which creates a conflict of interest.

Royal Bank of Scotland Start-up Business Account

There’s a verification process which requires you to upload ID and relevant business documents which can vary depending on your entity type. Create ledger accounts to classify transactions into pre-defined categories per your business model and reporting needs. To do this, accounts for sole trader you will need to be aware of tax regulations, basic accounting, and bookkeeping. From the 2024 to 2025 tax year, cash basis is the default method of accounting. You must opt out if you want to use traditional accounting or cannot use cash basis accounting.

Found: Best for integrated tax filing

The account pays 3.09% APY with a daily balance of $5 million or below and 3.90% APY with a daily balance above $5 million. While it is not a requirement, it may be smart to separate your finances earlier to save yourself hassle should you register further down the line. Consider whether you want an online-only account or if you’d prefer the option of branch services. Sole trader accounts normally come with single access too, since there is no need for multiple users. It can also save you a lot of time, money and headaches down the line, by ensuring compliance and helping you optimise your tax efficiency. It is your responsibility to inform HMRC that you have started to trade and to file a tax return under self-assessment.

• If you’re opening your account digitally just follow the prompts to give your personal and business details – in a branch the team member will walk you through what’s needed.
• At year-end, the ledger balances are transferred to the trial balance.
• Being a beginner with a modest balance sheet might make it difficult for banks to lend money to you.
• It shows whether or not your business has made a benefit or loss during the bookkeeping time frame and whether debts can be paid as they become due.
• If you receive foreign payments regularly, Wise also provides you with fee-free services for receiving payments.

If the desired name is free, articles of organization must be filed with the state office where the business will be based. The business owner must create an LLC operating agreement defining the business structure. In any case, HMRC will need to see how much money your business makes, as well as the allowable expenses you may wish to claim. If your business and personal account are the same, it may be difficult to ascertain your earnings and expenses.