The short answer is no there is not a legal requirement for you to open a bank account in your Limited company name. Whilst this may come as a relief for those looking to move their Sole Trade over to Limited, you may find running your finances more difficult to manage without one.
Here are 3 reasons why having a Limited Company account will benefit you in the long run.
- Credibility – When trading between Customers and Suppliers, having a trading bank account can be seen as a layer of security especially when dealing with larger sums. Having the account in place would help your peers to see you as a legitimate business and may help build stronger relationships especially with those that offer credit terms.
- Record Keeping – When using your personal bank account when trading, you may find it difficult to distinguish your company’s finances from your own. This has a knock-on effect when it comes to your annual accounts, as these may take longer to complete. This could mean potentially higher fees, with your accountant spending more time filtering through what transactions are and aren’t Business related.
- Keeping things clean – The key thing to remember with Limited companies is they are their own entities. Not being able to effectively track your transactions may cause you to draw too much out the company, which puts you at risk of an over drawn directors loan account and Section 455 tax at the company’s year-end.
Opening a business bank account for a limited company is very similar to opening a personal current account. If the company has UK resident directors and shareholders the process should be straightforward. Most high street banks will be able to advise and offer your company an account. Whilst you may look to App based banks, which like the high street banks all offer Integration to accounting software's keeping your company compliant and your accountant happy.