When running your own business, it’s really important to separate the cash in your personal and business bank accounts. This is so you have a handle on what transactions flow through your business and the best way to do this is to keep your business transactions separate to any of your personal spending.
If you are a Limited company it is actually a legal requirement to keep the business cash separate because the business is a separate entity and the best way to do this is to have a dedicated bank account for all the business related transactions.
When looking at the finances for your company, the benefit of keeping personal and business spends separate is so you can make business decisions based on your cashflow. If you merge or blur the lines between personal and business spending this becomes very difficult.
You can track your personal and business transactions in your accountancy software so you are able to generate reports that filter your personal spends from your business spends but this is definitely not the best way to run your business. It is always best practice to keep the two apart as much as possible.
However, as with any business, especially start ups, I understand that paying bank charges and fees is a considered decision and one that may stop you opening a business bank account. This doesn’t need to be the case. There are lots of banks that now offer free banking and minimal fees so running your business efficiently is as easy as ever!
For example, with Starling Bank you can open a business bank account for free with zero bank charges so there’s really no reason not to keep your business transactions separate in a proper business bank account.