There are many reasons why a new business owner may forgo opening a business bank account and struggle on using their own personal account for their business transactions. Sometimes they simply run out of time, having focused on everything else and forgotten to open a business bank account, they suddenly realise that it cannot be done instantly and so opt to carry on using their personal account. Other times it is through lack of conviction, fear of business failure leads them to bulk at putting the business finances into black and white. Most often, though, it is in the mistaken belief that it will save them a little money if they do not have to fork out for business banking fees.
Not paying to have a separate business account can often prove something of a false economy, as, for the small amount that most business accounts might cost, a business can gain so much more than just a bank account.
The way that customers and other businesses with which you do business view you is very valuable; image is everything in business and having your business transactions move through a personal rather than a business account smacks of small time; your business is far less likely to be taken seriously and plenty of customers will be put-off by the impression of paucity it creates.
Trying to do business accounts when using the same account for personal and business finances has the potential for absolute disaster; even allowing for not making any important fiscal errors, the sheer time consuming nature of fussing around separating everything out will be very trying for most new business owners.
Make no mistake, HMRC will be watching you; there will of course be times when you will have to have contact with them, provide them with information etc. and other times when they will just be watching. Mixing personal and business bank accounts may cause them to look a little harder at you and your business, as it makes financial transparency more difficult to demonstrate at a glance. If the Tax Man wants to see that you are declaring everything you should, having to fight through hundreds of domestic transactions to locate those of the business will not endear you to them.
Business accounts can provide your business with more than just banking facilities; many banks will throw-in added extras, such as accounting software, deals on insurance and even offer the actual banking services free for the first year or more of business. They are also a great source of financial advice for the new business owner.
So, rather than viewing a business bank account as an extra overhead on your new business, perhaps you could look at it in terms of what it can provide in benefits for your venture. If a business bank account can help your business profile or simplify its record keeping maybe it is worth the effort of setting it up, if it can also help the authorities to look favourably on you and throw-in a bit of guidance and some cheap insurance to boot, well then maybe it becomes an essential to add to your list.