Businesses are becoming increasingly interested in finding better ways to manage their finances. Let's look at how many bank accounts a company should have.
What's on the blog?
- What is the optimal number of bank accounts for a business?
- How many bank accounts does a company require?
- Is it beneficial to have multiple business bank accounts?
As a business owner, you may wonder how many bank accounts you should have for your company. The answer is dependent on your specific situation. You may want to have more than one business account if you have money to save in a savings account or if you want an account for small, daily expenses.
Bank accounts for businesses come in a variety of shapes and sizes, and as you'll see here, there's a lot of leeway in choosing the right one for your needs. Let's look at how many bank accounts a company might require.
What is the optimal number of bank accounts for a business?
When it comes to specific numbers, there is no limit to the number of business bank accounts you can or should have. If your bank approves your application to open a business bank account each time, you should be able to open as many as you need.
This means you can have as many business current and savings accounts as your company requires. No two businesses are alike, and it can be advantageous to be able to split your finances across multiple accounts in order to keep a close eye on your money for the various purposes you'll use it for.
If you're a sole proprietor, you may be wondering if you even need a business bank account. Sole proprietors are not legally required to have one, and a personal business bank account may suffice. The reason for this is that, as a sole trader, HM Revenue and Customs treats all business and personal income equally for tax purposes (HMRC).
If you own a limited company, you'll need a separate bank account for your company's finances. This is due to the requirement that you keep your business and personal finances separate.
Can I conduct business using a personal account?
If you are a sole proprietor, you can use your personal account for business purposes; however, a dedicated business account may be beneficial.
If you own a limited company, you must keep your personal and business finances separate by opening a business bank account.
A limited liability partnership (LLP) must have its own dedicated LLP business bank account in order to conduct business transactions.
How many bank accounts does a company require?
At the very least, you may require a business current account with basic functions such as money withdrawal and deposit. Limited companies must have this because they cannot use personal accounts for business purposes.
While it is possible to operate as a business using a basic personal current account (if you are a sole trader), opening a business current account can help you optimize your finances by simplifying the way you pay taxes and allowing you to build your profile as a legitimate business in its own right.
Importantly, opening a business current account begins the process of establishing your company's credit score. It can also make your company appear more professional to customers and may be useful if you ever need to apply for credit, such as business loans.
When people ask how many bank accounts a business can have, it's important to think about your needs. For example, you might want to consider having a current account for your daily expenses as well as a savings account for any extra cash in the business that you can set aside for a later date.
Some commercial banks may not allow you to open more than one account per business. Check with your current provider, if you have one, to see if this is the case, as you may need to look elsewhere to open another account.
Alternatively, you could consider switching to a different provider that allows you to open multiple accounts for your company.
Is it beneficial to have multiple business bank accounts?
Having more than one bank account is a big responsibility because you must check in on each of your accounts on a regular basis to ensure everything is in order.
Keep a close eye on transactions to see if there are any unusual outgoings, whether from malicious activity or simply human error.
Even if you only have one business account, having security measures in place to protect your money is critical. If you want to actively protect your business bank accounts from malicious activity, speak with your bank to see what security procedures they can implement.
Having more than one bank account may benefit your business, but it's important to do your research first to ensure you make the best decision for your specific circumstances.