Do I need a business bank account as a sole trader?

Not legally, but it is strongly advisable. Separate accounts make bookkeeping, VAT and self-assessment far simpler, and they give you a truthful picture of business performance rather than a blended personal balance.

How much should I keep in reserve?

Aim for two to three months of fixed costs plus the tax and VAT you have already collected. Treat the tax portion as money that was never yours.

Is a business credit card a good idea for a trade business?

It can be useful for material spend, spend control across staff and cashflow timing — but only if the balance is cleared and the business is incorporated and trading profitably. It is never the right answer to a shortfall you cannot otherwise cover.

Business Money for UK Tradespeople | The Trades Business Builder

Money problems in trade businesses are rarely about turnover. They are about mixing personal and business spending, no tax reserve, and no idea what next month looks like until the day it arrives.

This hub covers business accounts for sole traders and limited companies, separation, tax and VAT reserves, emergency funds, forecasting, quiet periods, profit, bookkeeping, receipts, debit versus credit, responsible use of credit, and reviews of the products we mention.

Start with the numbers

What this hub covers

Topic clusters

Written in the order the decisions actually arrive.

Structure and separation
One account for the business, one for you.
Reserves and forecasting
Knowing the number before it becomes a problem.
Records and reviews
Bookkeeping that takes minutes, and product reviews with the limitations included.

Marcus on this hub

What matters most here

The three things that change the numbers fastest in this part of the business.

Separate the money before you do anything else

One account that only ever receives customer payments and pays business costs turns the tax return from an archaeology project into an afternoon. It also shows you, honestly, whether the business made money this month.

Sole traders are not legally required to have a business account, but mixing personal and business spending is the single most common reason a trade business cannot tell profit from cash.

Hold reserves for the bills that always arrive

VAT and tax are not windfalls that appear in January. Move a percentage of every payment received into a separate pot on the day it lands — 20% of the VAT element and a realistic slice for income tax and National Insurance.

Add a third reserve for the quiet months. Two to three months of fixed costs is what stops a slow February turning into borrowing at a bad rate.

Forecast thirteen weeks, not twelve months

A one-page rolling forecast of expected receipts and known outgoings, week by week, is the most useful piece of paperwork in a small trade business. It shows the pinch point before it happens, while you still have options.

Update it on the same day each week. The point is not accuracy to the pound; it is seeing week nine dip below zero in time to chase an invoice or delay a purchase.

Tools

Calculators for this area

Templates

Paperwork for this area

Not sure where to begin? Start here

Disclosed partner offers

Accounts worth setting up

We are paid a referral reward if you open an account using our links. It changes nothing we have written above.

Business bank account

Free business account with invoicing, payment links and expense cards — plus £200 free cash with code REFER200. No credit check, open in about five minutes.

£200 free cash when you open a Tide business account with code REFER200

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Claim £200 free Read the review

T&Cs apply. £75 free when you complete transactions of £100 within 30 days, and another £125 free when you deposit at least £5,000 in a Tide Instant Saver within 7 days. Affiliate link.

Business credit card

Business credit card for incorporated businesses: 1% uncapped cashback, no annual fee, limits up to £250k — plus 7,500 points (worth £75) with code SETTINGUP. Credit is subject to status.

7,500 bonus points (worth £75) with promo code SETTINGUP

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Claim 7,500 points Read the review

T&Cs apply. Get 7,500 points (worth £75) when you complete your first card transaction within 30 days of signing up. Subject to eligibility and status. Affiliate link.

Straight answers

Common questions

Do I need a business bank account as a sole trader?: Not legally, but it is strongly advisable. Separate accounts make bookkeeping, VAT and self-assessment far simpler, and they give you a truthful picture of business performance rather than a blended personal balance.
How much should I keep in reserve?: Aim for two to three months of fixed costs plus the tax and VAT you have already collected. Treat the tax portion as money that was never yours.
Is a business credit card a good idea for a trade business?: It can be useful for material spend, spend control across staff and cashflow timing — but only if the balance is cleared and the business is incorporated and trading profitably. It is never the right answer to a shortfall you cannot otherwise cover.

Business Money

Start with the numbers

Structure and separation

Reserves and forecasting

Records and reviews

Separate the money before you do anything else

Hold reserves for the bills that always arrive

Forecast thirteen weeks, not twelve months