Freelancing is great for so many reasons. It gives you full autonomy to run your business how you see fit, lets you show off your creative flare without anything holding you back, and gives you the power to decide how much, or how little, you want to work. But as a freelancer you still have rules you must comply with – we’re talking about all things tax!

For some freelancers, putting their business’s finances through a business bank account is a legal obligation, but for others, it isn’t (although it could be in your business’s best interest regardless).

In this blog we’ll take a look at the best business bank accounts for freelancers.

Do freelancers need a business bank account?

The answer depends on your business structure. If you’re freelancing as a sole trader, you’re free to do so using your own personal bank account. A freelancer who’s registered as a limited company though, is legally required to have a business bank account.

This is because sole traders technically are the business, HMRC doesn’t differentiate between the two and they can keep all their profits after tax.

A limited company is a separate entity to you as a person – so you’ll need a business bank account to separate your business’s finances from your own.

Why would a business bank account be beneficial for my freelance business?

Many freelancers won’t legally be required to own a business bank account – but that doesn’t mean it wouldn’t be beneficial to use one.

There are many benefits of having a business bank, for example:

• It’s easier to track your business expenses (for example, let’s say you want to claim for fuel you’ve used on a business trip – you don’t want to either forget about the transaction, or claim the wrong costs for fuel you spent that week out with the family).
• It can boost your credibility with suppliers and clients
• You’d be protecting your business’s credit score (because it won’t be associated with any personal credit)
• Opening a business bank account gives you more freedom financially because personal accounts often come with higher restrictions on withdrawals and transfers

We have more reasons over on our blog, do freelancers need a separate bank account.

What should freelancers look for when comparing banks?

While we don’t want to overwhelm you, there are quite a few things you need to consider when shopping for a business bank account! We’ve narrowed it down to the most important things to look at, so if you find something that ticks all of these boxes, you know you’re on to a winner.

What are the fees like?

It’s important to look for an account with no (or low) monthly fees. It can also help if they charge low:

• Transaction fees
• Foreign exchange fees
• Withdrawal fees

Always check out the terms and conditions, as some banks may even waiver fees if you maintain a minimum balance.

Do you have access to credit?

Even if you don’t plan on using credit, it’s always good to have there as a buffer. Look for accounts that offer credit cards and overdrafts – just in case an unexpected business expense comes from nowhere (it does happen!).

Do they offer international capabilities?

If you work with clients overseas, you’ll need to consider accounts that offer multi-currency facilities, international wire transfers and foreign exchange services. Even if you currently don’t have clients overseas – this is definitely worth considering if it’s a goal you have for the future!

Are the payments secure?

Secure and convenient payment processing is a must – think online payment gateways and mobile payment apps. It’s also a bonus if you find a bank that offers things such as payment reminders and tracking features.

Can you speak to someone easily when facing any issues?

We don’t mean to scare you, but things go wrong from time-to-time. When it comes to your money, you need to be assured that you’ll be able to speak to someone who can fix your issue ASAP. On top of that, ensure the banking features are easy to use, and the customer service reps are accessible.

Do they integrate with the accounting software you use?

We saved this one until last, but it’s super important. Integrating with accounting software helps automate your financial record-keeping, which means you can complete your tax returns much easier, and have one very happy accountant! Software such as Pandle integrates with most banks.

Best business bank account for freelancers

There are so many to choose from, depending on your industry and the needs of your business, but here are some honourable mentions to start you on your journey!
 

What is FSCS protection?

You probably noticed in the features column we’ve listed FSCS protection. This stands for financial services compensation scheme. Basically, if the bank fails, you’re covered up to £85,000!

We know this is a tough decision to make, so we’d recommend speaking with an accountant for more advice. You’ve got this.

Find even more advice and guidance for freelancers in our info hub!