A business savings account is specifically designed for businesses to earn interest on their savings and save money long term, unlike current accounts which tend to be used for day-to-day transactions offering little to no interest.

Separating personal and business savings ensures there is distinction between your personal and business entities and simplifies financial management and tax reporting. 

It is not illegal, particularly for sole traders, to keep business money in a personal savings account, as their personal and business finances are not legally separate. However, this practice may breach the terms and conditions of a personal savings account and could cause complications with HMRC requirements.

A dedicated business savings account is recommended to maintain clear financial records and ensure you are adhering to account terms and conditions, providing peace of mind for your business.

Yes, the type of business significantly influences whether a business savings account is right for you, and whether the money needs to stay separate from a personal savings account, as each type of business has distinct legal and financial obligations. Below, we outline the considerations for different business types.

A sole trader is a type of business owned by one person. As a sole trader, there is no restriction to have a business savings account, separate to your personal savings account. This is because they are not viewed as separate legal entities. Although a business savings account is not necessarily required, it can be beneficial to separate your personal and business savings to help with tax reporting and save for possible future business expenses.

A partnership is a type of business owned by two or more parties who invest and manage the business, with the objective of making and sharing profit.

If you are a partner in a limited liability partnership (LLP), you will need a separate business savings account as the business is a separate legal entity from the individual partners.

If you are in a general partnership, you do not have to have a separate business savings account, as the partners’ shares of the profits are taxed as personal income, meaning the business is not legally separate from the partners. Although a business savings account is not a requirement, they are designed to earn interest on your spare business cash boosting your business finances, helping to save for the long term, and help keep track of any business expenses.

A limited company is a type of business that is legally separate from the people that own it. As the business is its own legal organisation, they must maintain a separate dedicated business savings account, to comply with regulations as the company’s money must be kept separate from its personal finances. Using a personal savings account risks breaching the businesses terms and could lead to legal or tax complications by mixing personal and business finances.

A corporation is a legal entity that is separate from its business owners or founders. It has no single owner, instead the shareholders are its owners. A corporation must have a separate business savings account to its personal finances, to comply with legal regulations.

A business savings account is specifically designed for businesses to earn interest on their savings, save money for the long term, boost your business savings, and helps to keep track of your business savings separately to your personal savings.

As a business owner, you want to make the most of any spare cash, which is why business savings accounts can be beneficial to your business. Your money will be working in the best way for you, gaining interest over time and therefore, providing an extra boost to your business’s finances. The best business savings account for you will depend on the type of business you run and what you want to get from your savings.

Why choose a business savings account with The Tipton? Our accounts are designed to support your business’s financial stability and growth, offering a range of savings accounts including limited access and notice savings.

Our business savings accounts offer competitive interest rates, allowing your surplus funds to grow. With our limited access or notice business savings accounts, you can choose an account that aligns with your business objectives, providing a higher return than typical business current accounts.

We are covered by the Financial Services Compensation Scheme (FSCS). The FSCS can pay compensation to depositors if a bank, building society or credit union is unable to meet its financial obligations. Most depositors (including individuals and small businesses) are covered by the scheme. Small businesses must meet specific criteria to be eligible under the scheme, and it is a regulatory requirement that we maintain records to help determine the eligibility of our customers.

A business savings account allows you to build a financial reserve for unforeseen expenses or economic challenges, ensuring your business remains stable without relying on loans or credit.

A business savings account helps your business with its financial planning by creating a financial buffer for unexpected costs, earning interest on its savings to help grow reserves, and supports future growth.

At the Tipton, we are dedicated to supporting local businesses with savings accounts that meet your business needs. Our business savings accounts are available to sole traders, partnerships (unincorporated entities), limited companies, and limited liability partnerships. Our accounts offer competitive rates, FSCS protection, and the flexibility to plan for the future.

As a local building society, we are proud to be empowering local businesses to reach their business savings goals. Get in touch via our website contact form and view our range of business savings to learn how our accounts can help your business grow, or call our dedicated team on 0121 557 2551.