Should I Open a Business Bank Account?

When you are first starting your business it may seem an unnecessary hindrance to worry about how to manage your business transactions if you are starting off small. After all, it’s sales that matter, right?

However, it will be much simpler in the long run if you separate your personal finances from those of your business.

When you look back over time and need to analyse income and expenditure, it is much easier knowing that you only have to anaylse the transactions in one separate bank account. It certainly makes it less of a chore.

If you don’t separate business and personal items then you give yourself an extra job in that you have to identify and analyse each item into business or personal before you can assess your business cash flow. In short you give yourself an extra job.

Another benefit to separating business transactions comes if you decide to give the bookkeeping to someone else at a later date. That person would have a much harder time recognising which items were relevant business transactions because they are not as familiar with your transactions as you would be.

This would mean they would spend more time investigating transactions instead of carrying out the analysis. This of course would mean higher charges, not to mention a lot more questions to you regarding explanations of uncertain items.

Finally, you should be aware that the tax man takes a dim view when you mix business and personal items. After all, is it a business venture or merely a hobby that you are running?

You risk higher tax assessments if it is not clear what items are legitimate business expenses. It is silly to invite trouble when you can easily prove that you are in control of your business and have the relevant facts to hand. Separate bank accounts and records will achieve this for you.

Business bank account charges can be an issue, but currently in the UK there are a number of banks, particularly those operating online accounts, that will let you bank for free.

There are usually conditions however, namely trying to get as many of your transactions made by direct transfer (BACS, D/D etc.). It is just a matter of shopping around for the best deal.

Please don’t feel that you have to use the same bank as the one that runs your personal account. It is worth investigating if they will let you have a special deal, but don’t feel beholden to take it. Competition is rife in the banking industry and with a little persistence you should be able to secure a favourable deal.

A final word, if you do opt to open a separate bank account, then please make sure you put all business items through it. It is easy to pay for an item out of your personal account and then forget to allocate it to business expenditure.

Don’t forget that the item will more than likely be tax deductible and you want to make sure it is included in the accounts for your business.

Trevor Sadowski has worked in Accountancy for the past 23 years and has been a member of the Chartered Association of Certified Accountants (ACCA) since 1994.

Trevor currently provides contract accountancy support through short-term placements or interim management in the UK. To find out more about his accountancy services, visit his web site at http://www.moveaheadonline.com

No Bank Account Credit Cards

Unfortunately, the options to get a new credit card are severely limited for people with less-than-desirable credit histories. The restrictions are so stern, in fact, that many consumers with bad credit are unable to buy simple consumer goods, or are slapped with very high interest rates.

There is good news, however, and it comes in the form of ‘no bank account’ credit cards. These cards allow people with low credit ratings and no bank accounts to enjoy the purchasing power of a credit card.

‘No bank account’ credit cards are usually pre-funded, meaning the cardholder ‘reloads’ it with money in order to use it. This arrangement is perfect for people who want to control their spending and limit themselves only to what they can afford. Most individuals recovering from bankruptcy use this type of card. It not only reestablishes credit history and demonstrates financial responsibility to creditors – it also affords users the convenience of a fully-functional credit card while living within their income.

If you are thinking about getting a ‘no bank account’ credit card, do not hurry – you should first shop around for the best deals.

The best ‘no bank account’ cards offer the same benefits as a regular credit card, such as rewards programs and online access and management. The card should be accepted in millions of locations around the world, and have ATM access for easy cash withdrawals, and other such convenient features.

You should also find a credit card provider that does not ask for annual fees or transaction fees, and offers free customer support either via the telephone or online. Some companies even go so far as to provide ‘wireless alerts’ to ‘no bank account’ credit cardholders – such a service will enable you to easily keep an eye on your account via text messages (SMS). The added features will certainly help you budget your finances even more effectively.

Bank Credit Cards provides detailed information on Bank Credit Cards, Bank Secured Credit Cards, Bank Student Credit Cards, No Bank Account Credit Cards and more. Bank Credit Cards is affiliated with Banking Services.