BankingNow that you running your own business you will need to keep accurate and verifiable financial records. One of the first things you will need to do is to decide how you are going to keep your personal accounts separate from your business finances, whether this is by opening a business bank account or a second personal bank account.
Do I Need A Separate Business Bank Account?
Therapists who go into business with ‘sole trader’ status (which means that they are personally liable for any money owed to the business), do not have to have a business bank account if they are trading in their own name. Instead, it is permissible to use an existing personal bank account or set up a designated second account to operate as the ‘business’ account. However, if you are setting up in business as a limited company you will need to open a business bank account.
Why Might I Find A Business Bank Account Useful?
Even if there is no legal requirement for you to have a business bank account, it does make good financial sense to check out what benefits you might get from having a business account, and compare these to the cost of running such an account.
The usual benefits of business banking are:
- it is easier to keep your business and personal financial records separate
- it appears more professional to have a business account
- you will have access to the support of a business manager who knows your business
- you may have access to cheap deals such as website construction
- you will usually have access to a business support or egroup
- interest is now often paid on business accounts
- it will make it easier for you to get a bank loan for your business
- you will get a fast response to any enquiries
- there will be a higher degree of security in respect of your account
- you will get a variety of ways of banking: in person, over the phone, on the internet.
Some banks may also offer you free book-keeping systems or software, free entry in certain directories or websites, free business guides and free connection to your own freephone number. Others may offer you free business banking depending on the way in which you run your account.
Setting Your Service Levels
With some banks you can choose the type of working relationship that you want to have with your business manager. Given the average turnover for most therapists, it is unlikely that you will require a high degree of input from your business manager, especially if you are operating as a sole trader. If the only advice you are likely to require is regarding business loans or other common financial transactions, you can keep your costs to a minimum by opting for the lowest level of support – this will generally be phone advice rather than face-to-face meetings. This level of service and support is usually provided free of charge.
Discounted Banking
Most business bank accounts stagger the charges that are applied to your day-to-day transactions for at least the first two years. Quite often you will not be charged anything for any payments into, or withdrawals from your account during your first year of trading (please note – this does not include the set-up fees should you decide to take out a business loan). In subsequent years reduced discounts may apply, for example a 50% discount for
your second year of trading and a 25% discount for your third year. This may mean for some accounts that it’s not until year four, by which time you should be fully set up and running, that you will incur the full charges.