Top 5 things that Business Owners should know about their Business Accounts

Running a business in the UK requires more than just a great product or service, it involves staying compliant with evolving financial, tax, and legal regulations. There is a lot to stay on top of when you run your own business so understanding the essential things that you need to be aware of is key. Whether you’re an established entrepreneur or just starting out, staying informed is the key to financial success and compliance.

Legal Requirements for Business Accounts            

If your business is registered as a Limited Company, you are legally required to open a separate business bank account. This ensures that personal and business finances are kept separate, simplifying bookkeeping and tax filings. Sole traders, while not legally required to open a business account, often benefit from doing so for better financial tracking and professional transactions.

VAT Registration Threshold Changes            

From April 2024, the VAT registration threshold increases to £90,000 (from £85,000), and the de-registration threshold rises to £88,000. Understanding these limits is crucial for businesses to stay compliant and decide whether voluntary VAT registration is beneficial for claiming input tax deductions.

Flexible Business Banking Options            

Many UK banks offer tailored business accounts, including e-money accounts or services from payment service providers (like PayPal and Stripe) for smaller enterprises. These alternatives may come with fewer fees and better integrations with accounting software, though they lack the same legal protections as traditional accounts.

Tax Rate and Allowance Changes            

Corporation tax remains tiered in 2024: 19% for profits under £50,000 and 25% for profits over £250,000, with marginal relief for profits in between. Additionally, reductions in dividend tax allowances and capital gains tax exemptions in 2024 will impact owners who rely on these incomes. Keeping up-to-date on changes to thresholds ensures accurate financial planning.

Compliance and Transparency Rules            

UK businesses must adhere to stricter compliance measures in 2024, including the need for a valid registered office address, a confirmed lawful purpose for the company, and updated contact details. Companies House will be increasingly vigilant about removing inaccurate or misleading information.

Staying informed and proactive about these changes can save time, reduce errors, and optimise tax savings. Consider consulting an accountant for personalised advice.

If you have any questions relating to understanding business finances contact Graham Cook at Jarem Accounting Ltd.