Bank accounts for freelancers

Looking for a bank account to help you manage your freelance business? Here’s how to find the right one.

If you’re a freelancer, you’ll need a bank account to be able to receive all those lovely payments from the work you’ve carried out. But what type of bank account do you need and does it need to be separate from your personal bank account?

What is a bank account for a freelancer?

A bank account for a freelancer is simply a bank account that you use for your freelance payments and expenses. It works in the same way as most other bank accounts.

As a freelancer, you don’t strictly need to have a business bank account. That’s because your business (or self-employment) isn’t legally separate from you. Limited companies, on the other hand, must open a business bank account.

As a result, there’s nothing to stop you from using a personal bank account for your freelance payments and expenses – particularly if these are fairly straightforward. You could use your normal, everyday bank account or open a separate personal account just for your freelance finances.

But there are benefits to opening a separate business bank account. For a start it will make it easier to separate your business and personal finances. What’s more, these accounts tend to offer more business-specific features, so you might find it more beneficial – particularly if your business needs are more complex.

Some providers, such as Revolut, provide separate accounts specifically for freelancers. Revout Pro, for example, sits alongside your personal Revolut account, but must only be used for business spending. Because it is separate from a Revolut Personal account, it has its own features to help you create invoices and track payments.

How can it help?

A good freelancer bank account will help you to manage your income and expenses.

If you choose a business bank account, it will often include certain business tools, such as automated invoicing, accounting software and payment tracking features – all of which can make it much easier to file your tax return and stay on top of your finances.

Opening a business bank account rather than a personal account can also make you look more professional.

What should I look for when choosing one?

When choosing a freelancer bank account, it’s worth looking at the following:

  • Fees: Business bank accounts are more likely to charge an account fee and/or fees for certain banking transactions. As a freelancer, you’ll want to keep these fees to a minimum, so look for a low-cost option.
  • Integration with accounting software: Many business bank accounts will integrate with accounting software such as Xero and QuickBooks. This can make your life a lot easier when you’re filing your tax return.
  • Business tools: Also check whether the account comes with features such as automated invoicing and payment trackers. Some accounts let you set aside money into different pots to help you cover tax and other bills.
  • Credit options: If you think you might need an overdraft or a credit card, check whether you can apply for these after opening your account.
  • Account management: Are you happy banking via an app or online or would you prefer to be able to pop into your local bank branch for certain transactions?
  • FSCS protection: Check whether the money in your account is protected through the Financial Services Compensation Scheme (FSCS). This protects funds of up to £85,000 per person, per financial institution. Some online providers won’t be FSCS protected, but will safeguard your funds in other ways.
  • International payments: If you work with clients overseas, it’s worth looking for an account that charges low fees to send money abroad and lets you hold multiple currencies in your account.

Pros and cons

Pros

  • A freelancer bank account can help you keep your personal and business finances separate
  • You can benefit from useful tools such as invoicing support and accounting software integration
  • You might get access to credit such as an overdraft or credit card
  • Having a separate account for your business makes you look more professional

Cons

  • Fees often apply to business accounts

Bottom line

You can use either a personal or business bank account for your freelancing business – the choice is yours. Business bank accounts tend to offer a wider range of benefits, but can charge higher fees.

It therefore pays to compare your options carefully and consider your specific needs to be sure you find the right account for you.

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Rachel Wait is a freelance journalist and has been writing about personal finance for more than a decade, covering everything from insurance to mortgages. She has written for a range of personal finance websites and national newspapers, including The Observer, The Mail on Sunday, The Sun and the Evening Standard. Rachel is a keen baker in her spare time. See full bio

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