Whilst using a Personal bank account instead of a dedicated Sole Trader business account is not illegal, it could cause you some problems if you do.
Having a Sole Trader business account is always recommended for your business however sometimes we know that might not be possible.
So why would you not use your personal account for your sole trader business?
The first reason is that it is always recommended to keep your personal finances segregated from your business finances.
So if you used your own account as your sole trader business account then you would have to be very careful to make sure the money was carefully accounted for.
You would need to make sure the business money was not used for your personal benefit.
You would not want the Inland Revenue to questioning your finances.
This alone would be a good reason to have a separate Sole Trader business account.
The rules for Business accounts are generally different to that for a personal account.
As there is generally a larger amount of money flowing through a business account than a personal account, more anti-money laundering checks are performed for business transactions.
As such, if your bank were to start seeing large amounts of money flowing through the account, they may well stop or freeze some of those payments.
When a bank witholds any payments, it could cause your business some cash flow issues.
Also you could jeopardise your personal account if you use it for your sole trader business.
Generally speaking, the banks don’t charge for a personal account but they do for a business account.
So if you are using your free personal account for a business, it will almost certainly fall outside of their terms & conditions.
In these circumstances it is not unusual for them to either insist you stop using it for business or worst case, will serve you with notice of closure.
In that case you could end up with no business account as well as no personal account.
So whilst from a legal perspective if you need to use a personal account then you can, it is advisable to avoid whenever possible.
If you need any help or advice regarding a Sole Trader business account, please contact us on 020 3286 3929 or submit an application online, you will not be obliged to proceed but it might help source a suitable business account for you.
For some Government advice on setting up a Sole Trader Business account visit https://www.gov.uk/set-up-sole-trader