When running a business one of the best is deciding how to manage its finances.
There is no legal limit to the number of business bank accounts a company or sole trader can have in the UK. Having multiple business bank accounts can offer distant advantages when managing different financial aspects of your business.
This guide explores the business bank accounts how many you can have why you might need multiple accounts, and how to manage them effectively.
Whether you are a new business owner or an experienced entrepreneur, understanding the ins and outs of managing multiple business accounts is essential for your business’s financial health. Let’s dive into the article.
Table of Contents
How many bank business accounts can you have in the UK?
When it comes to managing your business finances in the UK you need to have multiple business bank accounts so there is no legal limit to having multiple bank accounts.
Still practically managing multiple bank accounts and the associated costs related to it are the main factors to consider:
No legal limit on the number of accounts
There is no legal restriction or law that you can have a limited no of bank business accounts.
This means if you are a small business owner a freelancer or the owner of a big organization you can open any number of business bank accounts as you need to manage your finances.
There are benefits to having multiple accounts like improved financial management, smooth accounting processes, automated accounts payable & receivable, and enhanced control over cash flow. Although there are some key factors to consider to bypass the unnecessary confusion.
Factors to consider while opening multiple bank business accounts
However, there is no legal limit to open multiple accounts but still it comes with certain responsibilities.
Below are some key points to consider while opening multiple bank accounts:
Structure of your business
The structure of your business plays an important role in signifying how many accounts you need to have for your business. a sole trader does not need more than one account where whereas an organization or company needs multiple accounts as the limited company needs a different account for VAT, payrolls, and operational expenses.
Finance management
If your financial operations are complex then you must need multiple bank business accounts to manage your finances. If your business has multiple revenue flows you need to use a separate bank account for each flow or stream to manage your finances properly.
Account purpose
Before opening multiple bank accounts for your business, make sure you have a clear purpose for opening each bank account just like you are using one account for operational expenses, a second for tax savings, a third for payroll, a fourth for VAT, and so on. Having clear goals for each account can make managing and tracking the finances easier.
Customer service
A bank with prompt service is the main key to addressing issues with business bank accounts. Look for a bank account that offers dedicated customer support.
Online banking
In today’s digital world online banking is crucial for smooth operating. Selecting a bank business account serves the robust online banking tools, mobile apps, and integrated account software. The ability to manage more than one online platform will help you to stay firm.
Fees
Different banks have different charges against the services they offer. This includes the monthly maintenance fees, and transaction fees for additional services including cash deposit. so must compare these fees to get the best one that fits you.
Why your business needed multiple bank accounts
Separate accounts for different purposes
One main reason behind opening multiple bank business accounts is to separate the funds for specific purposes. Separating your operating costs can prevent accidental overspending.
How you can structure the various bank business accounts mentioned below:
- Operational accounts: This is the most important account in business which can be used for daily transactions, including paying the expenses for business and receiving payments from customers. Most businesses needed a standard current account for operational purposes.
- Tax accounts: Taxes are the big running part of any business. Whether it is IT, VAT, or corporation tax, having a firm account for taxes makes sure that the funds are always available when they are due. Having a separate bank business account ensures that you don’t miss deadlines for tax payments.
- Payroll accounts: If you have employees working in your company then payroll accounts must be separate is a great idea. This makes the pay salaries smooth and makes sure that you won’t accidentally use payroll funds for operational expenses.
Managing different revenue streams
For businesses with multiple revenue streams, like those that serve products as well as services, it will be beneficial to open separate bank accounts for each income flow.
If you are the owner of the online store and offering consulting services then you need one account for product sales and another one for the service fees you are earning.
Different bank accounts for business help you to keep track of the profitability of each part of the business and make sure that you don’t mix up the funds.
Separating each stream bank account will help you to keep track of how well each stream is working in the business.
Simplifying VAT payments and payrolls
Managing VAt payments and payrolls can be complex things to manage if you are using only one bank account for business.
Using separate accounts for VAt and payrolls can make things work smoothly.
Benefits of having multiple bank accounts
Make accounting simple: Having multiple accounts for different purposes makes the bookkeeping of your business easier and reduces financial errors as well.
Enhances the financial organizations: Having multiple bank business accounts helps to manage funds according to their operation and purpose and offers you a clear picture of your finances.
Improves credibility: Having a separate account for payroll and VAT can boost your reputation by making sure about timely transactions.
Reducing the risks: Separating the bank business account can help to reduce the fund risk and protect your business in case one financial institution faces problems.
FAQ
Q.1 Can I have more than one bank account in the same bank?
Ans: Yes you can have more than one account in the same bank in the UK. Many banks in the Uk offer different types of business accounts including current accounts, savings accounts, and merchant accounts.
Q.2 How many bank business accounts should I have for my small business in the UK?
Ans: Multiple bank accounts you can have depending on your business needs. A very small business with just a few transactions needs only one account for all operations.
Conclusion
In conclusion, there is no limit to how many bank business accounts you can have in the UK. Although it is important to effectively manage multiple accounts lies in having a clear goal for every account also need to consider the associated costs, and choose the firm banking solution that helps to manage your finances smoothly.
By carefully recognizing your needs and implementing them with clear goals, more than one business bank account can be a powerful tool to enhance financial operations. If you have a clear goal in your mind then let your bank account work for you smoothly.
