How many business bank accounts do you actually have?
I’m still staggered at the amount of business owners that have just got one business account and everything goes into that one account; all the sales invoices go in and everything they pay out comes out of just one account.
This is dangerous because how the hell do you know what money is yours and what money is other people’s if it’s all coming into just one account. This is where some business owners become stuck because they get to the end of the tax year, they haven’t got enough money to pay the tax or the VAT.
What To Do
So, here’s what we need to do.
We need to set up three bank accounts.
Firstly, we’ve got your current account, the normal account that takes care of all your sales invoices coming in and all your transactions going out.
We need a second bank account if you are VAT registered because each month we should be taking the VAT out of our current account and paying it into a VAT account so we can pay the VAT man, on time.
And, the third bank account we need is a tax account. So, whether you’re a limited company; if you have pay Corporation Taxes, as an example. Or, whether you are a sole trader and you’re just paying your normal, yearly, annual tax, we need to separate the money to three different bank accounts, so you know where your money is at any one time.
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