Why you need a sole trader business account

Financial management is a huge part of running a business. If you’re a sole trader, you likely run a very small company or operate your business on your own. This means that financial management is entirely your responsibility, which can be overwhelming for many first-time business owners. To make things easier, you might consider downloading a business account.

This article will list a few reasons why it’s a great idea to start using a business account as a sole trader. We’ll cover a variety of topics, including:

• Separate your personal and business finances
• Track your expenses effortlessly
• Simpler invoicing
• Share data with your accountant easily
• The easy way to open a sole trader business account

It’s important to keep your business and personal money separate. It makes your finances more organised, and being organised is an important part of running a successful business. Unfortunately, many self-employed small business owners make the mistake of using one current account, which means that their personal and business expenses mix together.

Although it’s not a legal requirement to open a separate business account, it’s a great idea to do so. Setting up an account is usually quick and easy, and it will help you save time, money and make better financial decisions.

One of the biggest benefits is the insight you’ll gain into your cash flow. Your cash flow is the movement of money into and out of your business, and by having a separate business account you’ll be able to see this movement much more easily. 

A business account lets you see your business transactions clearly since they’ll not be alongside personal purchases. This clarity means that you can more accurately identify where your money comes from and where you’re spending it, and knowing that information can help immensely with financial decisions.

Tracking your business expenses is an important part of being a sole trader for several reasons. It makes budgeting easier and helps you see how cash moves through your business, but a notable motivation to track your expenses is to claim them back when filing taxes. 

For example: if you earn £40,000 and claim £10,000 worth of expenses, you will only have to pay tax on £30,000 of your earnings. Claiming business expenses can reduce your tax bill greatly, so remember to look into what business expenses you can claim while doing taxes. 

Unless you have all your company’s financial data in one place, recording where you’re spending your money and how much you spend can become very complicated. A business account helps simplify things, as it provides a location to record all of your transactions — including your expenses.

Countingup is a particularly useful business account for sole traders due to its variety of helpful features. One of these features is automatic expense categorisation: whenever you make a transaction with a Countingup account, it automatically goes into an HMRC-approved category like costs, assets, or liabilities. These categories appear on many HMRC tax forms, so filling the forms is as simple as copying the info across. 

Some business accounts can make sending and creating invoices much simpler. Many sole traders use invoices to request and receive payments, so making this task less time-consuming is a huge advantage. Any additional features that help you avoid common invoice mistakes are a further benefit.

But even without additional features, business accounts at least make it easier to know when your clients and customers pay their invoices, as you will be able to clearly see the payment appear in your account. Some business accounts have built-in software that makes them even more useful. For instance, the Countingup app allows you to create digital invoices without leaving the app.

Countingup’s invoice system is quick and easy to use. Once you’re in the new invoice screen, all you need to do is enter the client’s details, the services you provided, and the payment date. Afterwards, you can send the digital invoice off with a single tap. 

The Countingup app also allows you to make an unlimited number of customised invoices, all for free. You can also add your company logo to your invoices and even receive notifications when clients pay the invoices.

Some sole traders need to hire a professional accountant to help with organising company finances or completing their self-assessment tax returns. Though they’re a fantastic resource, one problem with accountants is that sending them all your relevant financial data can sometimes be a hassle. Even after you think they have everything, you might find your accountant chasing you up for documents you’ve forgotten to send.

Having a business account means that all your transactions are in one place, so you don’t need to email your accountant hundreds of different receipts or send them a ton of physical files for them to understand your financial activity. Instead, you can simply show the accountant your business account.

The business current account Countingup goes a step further than this. One of its most helpful features is the Countingup Accountant Hub. Using the Countingup app, you can share your bookkeeping with your accountant instantly by entering their email and sending an invite to the Accountant Hub. This way, you can share information without worrying about duplication errors, data lags or inaccuracies.

This article looks at a few of the most helpful features you can find in sole trader business accounts. If you’re looking for an account with all of these features, try using Countingup.

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. With features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

Signing up for a Countingup business account couldn’t be simpler. All you need to do is download the app and follow the steps listed. You can also click here for more information on Countingup, and how to start a three-month free trial today.