Opening an account for small scale freelance work - do I need a "business account"?

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gm8312

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For the last year or so I've been getting some freelance income (10-15K p/a) which supplements my PAYE income. I registered as a sole trader last year (and though I’m well under the threshold, I’m also looking at electing to register for VAT to claim back on some purchases I need to make for my freelance work). I got advice recently that its best to have a separate account for invoices, expenses etc (so far I’ve just been using my personal account) so I'm wondering... do I need to set up a “business account” or will any basic current account do? I’ve been looking at Revolut and N26’s business accounts, but there’s either monthly fees or restrictions on how many free transactions you can make. Would a basic free N26 current account be ok to use?
 
You should keep a separate for your business. It does not have to be what the bank calls a 'business account'. That is just a marketing term, and mostly an excuse for higher fees.

Are your customers VAT registered ? If not it will be very much to your disadvantage to be VAT registered.
 
Hi,

Wecome to AAM.

There are some previous AAM threads here about problems opening business current accounts with Revolut.
 
Would a credit union current account work?
I have no idea what fees they charge but it may be an option.
 
Salvadore said:
I can see why it might be pointless in this circumstance but why would it be such a disadvantage?
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My guess is the main disadvantage is having to charge 23% vat which, if the client is not vat registered, is not reclaimable and therefore you are 23% more expensive than you could be.

The other disadvantage is having to make returns and if you are like me, this is a hell of a chore (I have an accountant doing it)

Bunq Business account or Bunq personal account that you only use for business is a good option. Its €7 a month and well worth it imo. "Free" accounts tends to have many hidden charges and a lack of functuality
 
peemac said:
Bunq Business account or Bunq personal account that you only use for business is a good option. Its €7 a month and well worth it imo. "Free" accounts tends to have many hidden charges and a lack of functuality
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I think it's just good financial hygiene to have a separate account. It makes it much easier to compute taxable income and if a third party ever needs to look over your business model it makes things much simpler. A friend of mine used to do sole traders' tax returns and spent hours separating personal from business transactions.....it was reflected in the price he charged them.

So paying bank charges of <€100 a year on turnover of 200 times that amount isn't unreasonable.
 
gm8312 said:
For the last year or so I've been getting some freelance income (10-15K p/a) which supplements my PAYE income. I registered as a sole trader last year (and though I’m well under the threshold, I’m also looking at electing to register for VAT to claim back on some purchases I need to make for my freelance work). I got advice recently that its best to have a separate account for invoices, expenses etc (so far I’ve just been using my personal account) so I'm wondering... do I need to set up a “business account” or will any basic current account do? I’ve been looking at Revolut and N26’s business accounts, but there’s either monthly fees or restrictions on how many free transactions you can make. Would a basic free N26 current account be ok to use?
Click to expand...
You should really be getting yourself some decent professional advice here. Casually electing for VAT registration while worrying about at most a few hundred euro in bank charges suggests you need to prioritise better. Good luck with your venture.
 
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