Does The Self-Employed Person Need a Business Account?
As a self-employed person, you are not required to have a business account. But you will feel the difference between a person and a business account during the first financial operation.
The law does not oblige you as a self-employed person to open an account in a bank for a business. You can decide for yourself whether to use a business or a personal account for business. See with us what advantages and disadvantages both accounts bring in the Internet business.
Why prioritize a business account over a personal one when doing business
Using a personal account for business is complicated by the fact that your personal finances are simply mixed with business income and expenses. With split accounts, you get an overview of your turnover.
Lower accounting error rate
The above fact is automatically reflected in bookkeeping, where mixed-income and expenses from personal and business life in a personal account can lead to a higher accounting error rate and at the same time to higher costs, as the accountant must record all turnovers on the account. (including private ones).
Preservation of privacy The
The accountant, as well as the tax audit, will view all turnovers in account statements. They will also see your private transactions with your personal account. In the case of business, it will only be turnover related to business.
If you pay a monthly fee to your bank from a business account, you can include it in your tax expenses. Within the personal account, part of the amount of the monthly fee for maintaining a bank account can be included in the costs.
Less documentation when obtaining a loan, credit card, Online advertising, or lease
In the case of setting up an account, the bank can provide you with faster financing and, at the same time, the services of a business advisor, based on the turnover on the account.
Getting a POS Terminal
Will you need a POS terminal to do business? The bank will issue it to you for one of the business accounts. POS terminals are not issued for a personal account.
Disadvantages of business and personal account
It can be said that in the case of a business account there is only one and it does not even apply to everyone.
This is a situation if you pay monthly fees to the bank for both business and personal accounts. So you pay for two products separately. However, in Tatra Banka, you can have both accounts completely without monthly fees. For example, just use a personal account Remuneration Program or open a Trade license and have it for 12 months with no leadership fee. The free period does not end after a year. All you have to do is accept EUR 500 cashlessly into this account per month, and you will continue to have it free of charge.
When using a personal account for business, there is a risk of its cancellation
If you use a personal account for business, you are probably violating the terms and conditions with the bank and the bank may cancel the account (each bank has different conditions, so we recommend reviewing the general terms and conditions of your bank). Why can he take this step? The bank is obliged by law to report all maintained business accounts to the tax office (you, as an entrepreneur, waived this obligation at the beginning of 2020). If you only use a personal account, the bank has no way of knowing that you also use it for business. As a result, the bank does not fulfill its legal obligation. If a bank is fined, it can recover it from you.
We, therefore, recommend that you use the right tools in your business so that you have enough time to devote to the development of your business. With a trade account, you get an overview of turnover from business, good accounting conditions, and favorable conditions for financing business in the bank.