As a co-owner of a partnership, you will have to maintain a long to-do list in the first few months. You might be considering whether to open a dedicated business account for your new company. Watch this video to get the solution to your queries.
Do you need a business bank account for a partnership?
There are several types of partnerships when it comes to the legal structures of businesses. For doing a Partnership business, you need a business bank account. But it is not necessary to open a dedicated business bank account if you have a general partnership.
As a sole trader, you can continue using a personal account for business transactions if you prefer.
However, there are some advantages to having a separate account for business. You must think about these factors when selecting a bank account, as they can have an impact on how your business operates now and in the future.
Advantages of having a bank account:
- It helps to separate business and personal transactions
- Make accounting and cash flow management easier, which will help in the submission of tax returns to HMRC.
- It gives your business a professional look.
- Allow your company to take credit card payments from customers.
- Allow your company to apply for loans and other forms of funding.
At some time, your bank may ask you to switch to a business account. Also, if the bank notices that the account is being used for a large amount of money or a large number of transactions, they may threaten to close it unless you open a dedicated business account instead of using a personal bank account for business purposes.
When do you need a business account?
Certain business types are obliged by law to have their dedicated business account. These are some of them:
- Limited partnerships (LPs)
- Limited liability partnerships (LLPs)
These are the legal entities that must be managed separately. It means that all day-to-day transactions, as well as accounts, must be handled separately.
How to get a joint business account for partnership?
Applying for a partnership bank account with your other company directors is similar to applying for a sole trader bank account.
You must give the following information at the time of applying for a partnership bank account:
- Company details – Registered address, contact details and Companies House registration (for limited partnerships and limited liability partnerships).
- Projected yearly turnover and other financial details – Some banks may ask for additional proof of good credit history.
- All company directors must provide proof of identification and residence.
Credit and other checks will be performed during the process, which may take up to 1-4 weeks. Your new joint business bank account will be open and ready to use after this process is completed.