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Do I need a business bank account?

The answer is, it depends on the type of business you’re running. If you’re a sole trader or freelancer then you can use either your personal or business bank account for payments and transitions. However if you run a limited company, your business is a separate legal entity to you, and therefore you will need to open a separate business bank account for your business operations.

We’re going to explore the pros and cons of opening a business bank account if you’re a sole trader/freelancer, because in this situation you have slightly more choice. And conclude with some of the best business bank accounts out there. Read on to find out more!

Pros of running your sole trader/freelance business from a business bank account:

1. They’re designed for businesses

Lots of business bank accounts have specific features for business operations that personal ones won’t have. For example categorisations of the different types of transactions going in and going out to ensure you know if it’s a sale, refund or subscription payment.

2. Integration with accounting software

Many business bank accounts today also offer simple integration with your online account software such as Quickbooks and Xero. Often they also offer discounts and bundle deals through your business bank account to save on your accounting software subscriptions.

3. It looks more professional

If your clients pay your invoices through bank transfer, it looks more professional when they see your bank account coming up as a business account rather than a personal one.

4. Build your business credit rating

This is trickier to do when you are running from a personal bank account. If you’re looking at potentially exploring business loans from your bank, it will be more difficult to achieve these when you’re operating out of a personal bank account.

5. You’re prepared to scale

Over time your business will grow. The amount of transactions coming in and out of the account will increase. As this happens it may get harder to keep your business and personal finances separate if you’re operating out of a personal bank account. When operating one specifically designed for the type of business you’re running, you’ll find your own unique way of doing things and be prepared to scale your business.

Cons of running your sole trader / freelancer business from a business bank account:

1. Starting out

If you’re just starting out, you’ll be juggling a lot of different plates. It might help you to initially start from your personal accounts if the idea of having a business account seems daunting. But as your business grows, it’s a good idea to move over to a business account for your business type.

2. Fees

There are often fees connected to and associated with business accounts. It’s important to do your consumer research and find the one that works best for you depending on your business income.

3. May not pay interest

Your business account may not pay interest on your credit-balances. But again, we suggest doing your consumer research.

So which business account should you choose? Here are some of our favourites:


  • Great for sole traders
  • Easy to navigate if you’re starting out
  • Categorise your transactions with their in-app categories
  • Invoice from your phone within the app
  • Easy connection to your accounting software


  • Categorise your transitions with their in-app categories
  • Invoice from your phone within the app
  • Spready customer service
  • Easy switch between your personal and business accounts within the app if you have personal accounts already with Monzo


  • Overdraft option
  • No monthly account fees for first 6 months
  • Easily keep track of monthly cash breakdown in the app
  • Make payments up to £25,000 per day in the app


  • Expense card options available
  • Easily sort expenses in the app
  • Categorise transactions
  • Send, pay and track invoices in the app

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