What is a Sole Trader Business Bank Account?

A sole proprietor business bank account is a special type of account designed for self-employed people who run their own businesses.

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This type of account provides access to the necessary banking functions required by self-employed people, such as making payments, receiving money, and accessing credit facilities. Think of it as a business account for those who don’t have any employees and want to keep their personal and business finances separate.Does a sole trader need a business bank account?While it’s not legally required, this type of business bank account is a useful tool if you plan to conduct any kind of financial transaction in the course of your self-employed work. Without one, you won’t be able to accept payments or access the necessary credit facilities for running a successful business. In addition, having a dedicated business bank account can help you keep track of expenses and income more efficiently than using a personal bank account. This will make it easier to file your taxes, as well as help you to identify any potential financial irregularities.What are the benefits of a sole trader business bank account?A sole trader business account can provide numerous benefits to those who are self-employed. Here are just a few:
  • Easier to manage finances – Having a dedicated business account will make it easier to track expenses and income and identify any suspicious transactions. It also makes filing taxes much simpler.
  • Access to special features – Many banks offer additional features such as cashback rewards or interest-free overdrafts that can be beneficial for those who run their own business.
  • Separation of finances – By having a dedicated business account, you can ensure that your personal and business finances are kept separate. This makes it easier to manage both types of accounts and ensures that any potential legal issues don’t affect your personal assets.
  • Credit facilities – Many banks offer credit facilities for those with sole trader business accounts. It could be in the form of a business loan or credit card, which can be used for making purchases or taking out loans.
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Essential features of a solopreneur's business bank account

When choosing a business bank account as a sole proprietor, there are several features to consider. Look at the fees, interest rates, and services offered by different banks to ensure you get the best deal for your needs. As well, you’ll perhaps want to look for features such as:
  • Online banking: This feature allows you to access your account and carry out transactions from anywhere.
  • Debit card: a payment card connected to your business account makes it easier to control your expenses and report them.
  • Mobile banking: Most banks offer mobile apps that allow customers to manage their accounts on the go.
  • Credit facilities: Many business bank accounts come with credit cards or overdrafts, which can be used for everyday purchases or in case of an emergency. Essential for those traders who need to acquire expensive equipment.
  • Interest rates: Depending on the type of account you choose, you may be eligible for interest on your deposits.
  • Business credit card: Some accounts also offer a business credit card, which can help you build business credit and manage your finances.
  • Good customer service: Look for a bank that provides good customer service, as this can be invaluable in times of need.
  • Overdraft protection: This will help you manage unexpected expenses and protect your business from overdraft fees.
Online accounts in EuropeMany banks offer sole trader business accounts in Europe, with a range of features and services available. These include free online banking, low-cost international transfers, and the ability to accept debit and credit cards. Some banks also offer additional perks, such as discounts on business services or access to exclusive deals. The best way to find out which bank is best for you is to shop around and compare the different options available before making your decision. You should always ask about fees associated with the account and look into any special offers or promotions available.Especially if you do business across borders, an account that can be used in multiple countries is a great option. A multi-currency account can also be handy if you plan to transact in different currencies, as it lets you make payments and receive money without converting it into your own currency.Can you use a regular personal bank account for your solopreneur business? The answer depends on your local legislation and on what your accountant recommends. For example, in Finland, it's common practice to use a separate personal account for solo trader's business and it's allowed, for example, by a local accounting software firm Lemontree. Such approach saves you on bank service fees, but limits the services and features you have access to. Check the rules in your area — and remember that it's always best to dedicate a separate account to your business.
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Your solution

Narvi Payments: Account that Supports Your Solopreneurship

Narvi Payments is a revolutionary new business banking solution specifically designed for small- and medium-sized businesses. Not only does it offer a custom and fully-flexible all-in-one solution for your finances, but it also makes international payments and currency exchanges incredibly easy. With Narvi account, you’ll be able to access a robust integration solution to work with international customers and suppliers. You’ll have dedicated IBAN accounts, access to instant SEPA payments, and an easy-to-use dashboard.Worried about safety? Fear not. We’re regulated in Finland as an Electronic Money Institution and have passporting rights in 29 European countries.
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Originally published February 9, 2023. Updated November 6, 2024.Authors
  • Noah Edis, online entrepreneur and writer in the SaaS and fintech space. Noah has contributed to SEMRush, NordVPN, and dozens of other seven-figure content companies.
  • Valeriya Kushchuk, now Narvi's Digital Marketing Manager, previously a business reporter and marketer in the crypto space.
Disclaimer
This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Narvi Payments Oy Ab or its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
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