Should I have a Business Bank Account?

Christina Chong
Every business should have an account that is separate from any personal accounts. This is especially true if an individual is involved in more than one business.

Let’s cut to the chase. Yes, you should have a business bank account. However, there are examples where you are not legally required to have a separate account for your business. It’s worth understanding the different types of business structures in order to make the right choices for you.

Common business structures

The two most common business structures are sole proprietorship and corporation. When you are building a business, it’s important to consider fully which business structure to go with. Typically, the structure determines which income tax return form you’ll need to file.

Sole Proprietorship

If a business operates under a sole proprietorship, the business is unincorporated and usually run by one person. As a sole proprietor, you can (if you wish to) operate your business through your personal account. In this case, there is no legal distinction between yourself and the business. For tax purposes, in a sole proprietorship, the individual and business are one and the same.


In a corporation, it is typical that shareholders will exchange money for shares in the company. Regarding tax-paying purposes, a corporation is recognized as a separate taxpaying entity. This means that it is distinguishable from the individual. In this situation, the business needs to have a separate account from the shareholders. Issues and challenges can appear if shareholders are using one account for their personal and business affairs.

It’s worth noting that even if you are using another separate personal account to act as a business account, it can look like you’ve withdrawn all the cash out of the business personally. Understandably, this has its own consequences.

Benefits of separate bank accounts

Why do we recommend having a separate business account? Put simply, there’s numerous benefits.

It saves time

Nobody wants to trawl through their accounts to work out which is business and which is personal. If you miss something in the muddle, you risk missing out on deductions. Having a separate business account that is solely for business transactions will save you significant time when it comes to bookkeeping. As the saying goes: time is money.


How your clients views your business could be a deal maker or breaker. Having your business account separate from your personal account will build credibility and trust. When clients are paying you for your product or service, you want them to clearly see the name of your business rather than your personal name. This avoids causing any suspicion when transferring money between parties.


In the case of auditing, having separate business accounts allows auditors to have a clear distinction for transactions and expenses and makes it easier to determine the deductibles.

Credit cards

Should you have separate credit cards for your business too?

Credit cards are a bit different, however, we recommend that each corporation have its own credit card under its own name.

The main difference between credit cards and bank accounts is that typically credit cards represent debt, whereas accounts represent assets.

The bottom line

As a general rule, it is best to keep accounts separate. It’s important to do your research to determine which business structure and in turn, which account, is the correct one for you.

If you have any questions, feel free to come have a chat with us.

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