Best Business

Personal vs Business Banking

Do I Need a Business Bank Account?

Editorial Team

While using your personal bank account to manage your business finances might be a more convenient way of running your business, there are times when you have to separate your business income from your personal money.

Depending on your business structure, having a bank account is not necessarily a legal requirement but a good idea for most businesses, as there are many benefits to having a business bank account.

Can I use my personal account for my business?

A personal bank account and a business bank account share many similarities. But there are a few key differences that are worth considering.

The main difference is your personal account caters to your needs as an individual, as it offers features to help you manage your personal finances and allows you to receive and pay out money in your name only.

A business bank account, on the other hand, allows you to receive and pay out money in your company’s name. This is particularly important if you have registered your business with HMRC.

Business bank accounts will provide features that are designed for business use, such as integrations for accounting, payroll, and invoicing.

Compared to personal customers, businesses tend to have more transactions which is why banks usually charge a monthly fee or per transaction. This tends to be a small fee but varies between providers with many offering a better deal depending on your business type.

Pros and cons of business bank accounts

There are many pros and cons to having a business bank account compared to using your personal account. The main advantage is you can keep your business and personal finances separate, however, this can come at a cost depending on which provider you choose.


Having a business account separate from your personal account can have many benefits:

  • Separate your finances - Have all your business finances in one place so you do not have to sort through your personal and business transactions.
  • Automation - Expense categorisation, accounts management, and integrations with your accounting software can make taxes much simpler.
  • Access business financial products - Apply for loans, credit cards, and overdrafts.
  • Build up credit - many banks will look at your credit when considering if you are eligible for business finance support.
  • Appear more professional - clients prefer to make payments into a separate business account.


Whilst most businesses will benefit from a separate business account, for some, there are disadvantages to consider:

  • Fees - Business accounts are not necessarily free and can charge you a monthly fee. In addition, you may have to pay extra for cash deposits, withdrawals, and transactions.
  • More to manage - Although separating your business finances can be advantageous, using multiple apps if you're with different banks, different account numbers, statements and cards can be a drawback depending on which provider you choose

What are the features of a business bank account?

The most common business bank account features are deposits/withdrawals, bank transfers, standing orders, direct debits, mobile app, and online banking.

We have put together a list of features you should consider when comparing for a business bank account:

  • Account fee - it is standard for most business bank accounts to charge a monthly account fee, though many banks offer free accounts or trials for new, switching, or small businesses.
  • Everyday banking - will you be handling lots of cash & cheques? Or will the majority of your activity be online transactions? Traditional banks could be best for the first choice, while an online bank makes more sense for the latter.
  • Accounting software - many bank accounts also allow for simple integration with popular accounting & bookkeeping tools allowing you to do everything from one place.
  • Bad credit - bad personal credit history can affect your business bank account application, though there are some providers that don't require credit checks and specialise in bad credit accounts.
  • International banking - trading abroad can be expensive on standard accounts, there are some specific multi-currency accounts that allow you to hold & trade in different currencies.
  • Overdraft facility - an overdraft could help with tight cashflows or as a safety net just in case.

Can I use the same provider for personal and business banking?

You may find it easier to manage your money using your personal account as you will only have one branch to visit, or one account to sign in to. However, your personal bank may offer you a discount or bonus as an incentive for you to open a business account with them. Transferring money between accounts with the same bank is usually free and you can often manage your business and personal accounts from the same app or website.
However, you may find that you can get a better deal elsewhere, or that a different bank is better suited to your business needs. Many banks offer free business banking specifically on their startup bank account products, for a limited period typically up to two years.

It's also worth considering that having a business bank account can allow you to protect more of your money with the FSCS, as you are able to claim for your personal and business accounts separately up to £85,000. In addition, banks will offer priority support to business customers with some offering dedicated account managers in addition to free business resources online and in-branch.

Can a sole trader use a personal bank account?

For sole traders, their business is not considered to be a separate legal entity and so having a business bank account is not required by law. You could use your personal bank account if you are a sole trader, but you may find that opening a business bank account benefits you and your business. It is also worth bearing in mind that depending on the size of your business and the number of your monthly transactions, your bank may ask you to open a business bank account.

Can a limited company use a personal bank account?

Unlike sole traders, limited companies are considered separate legal entities and must have a business bank account. You will not be able to use your personal bank account because the money your company makes belongs to the company and must be kept separate from your personal finances.

There are certain rules that apply when it comes to taking out money from a business bank account from a limited company. If you chose to take money out of the companies account (other than the payment of salaries or dividends, both of which you will be taxed on) this will be treated as a director's loan and there will be strict rules around repayment which you will have to follow.