When setting up your business bank account you should decide whether you need a card in the company name.

Many freelancers use their personal credit cards for expenses and then claim these back from their company. In this case, be careful to separate business and personal items. One of the most common mistakes that small business owners make is to mix business and personal finances, for example, using petty cash or a business credit card to buy personal items, and then not accounting correctly for the transactions.

Once you start mixing your business and personal money, HMRC is entitled to consider that your personal accounts may constitute part of the business records, and can ask to see your personal bank records. This is something to be avoided at all costs.

It is therefore advisable to:

  • Pay for business expenses using your business bank account, business credit card or petty cash
  • Pay for personal expenses using your personal bank account, personal credit card or cash.

This is not always possible in the early stages of setting up your business, but the sooner you establish business accounts and use them for all business expenses, the better.

Managing your money