When you’re starting out, it’s tempting to keep all your money in one place. One account, one login, one balance. But mixing business and personal money usually causes more problems than it solves.

This guide explains the difference between business and personal bank accounts, when you need one and why it’s often worth separating things sooner rather than later.

What’s the difference

A personal bank account is designed for everyday life. Salary in, shopping out, the odd transfer to a friend.

A business bank account is built around running a business. It’s made to handle customer payments, supplier bills, tax and everything else that comes with earning money through work rather than employment.

On the surface they can look similar. In practice they’re set up for very different jobs.

Do you need a business bank account?

If you run a limited company, the answer is yes. Your business is legally separate from you, so its money needs its own account.

If you’re a sole trader, you don't legally have to. But that doesn’t mean using a personal account is a good idea. Also, many personal account terms don’t actually allow business use. Even if your bank doesn’t stop you, things can get messy fast once money starts moving.

Why keeping them separate helps

Clearer finances
When business money lives in its own account, you can see what’s yours and what belongs to the business at a glance. No scrolling through coffee receipts to find a client payment.

Easier tax and accounting
Come tax time, having everything separated saves hours. Your accountant will thank you and you’ll be far less likely to miss something important.

A more professional feel
Paying suppliers or getting paid by customers from a business account looks more established. It also makes it easier to set up things like Direct Debits or payment tools.

Less stress
When everything’s mixed together, it’s easy to lose track. Separate accounts give you one less thing to worry about.

What can go wrong if you don’t separate them

Using a personal account for business can cause issues over time.

You might:

• Struggle to track income and expenses
• Miss allowable expenses or overpay tax
• Breach your bank’s terms without realising
• Find it harder to prove income if you apply for finance later

None of this tends to happen overnight. It builds quietly, then becomes a headache when you least need one.

When it makes sense to switch

If you’re earning regularly, paying suppliers or planning to grow, it’s a good moment to move to a business account.

Even for side projects or early stage ideas, starting with a business account can make life simpler as things pick up.

You don’t need something complicated. You just need an account that fits how you work.

Choosing what’s right for you

Not all business bank accounts are the same. Some focus on digital tools and insights. Others lean more traditional.

Think about:

• How often money moves in and out
• Whether you need card payments or cash deposits
• How you like to manage money day to day
• What kind of support you’d want if something goes wrong

The right account should work quietly in the background, not demand attention.

Using a business bank account isn’t about being formal or corporate. It’s about clarity, confidence and giving your business room to grow without unnecessary friction.