What does the law actually say?
Not what most people expect. There is no rule that says "every limited company must have a business bank account", and we will not pretend there is.
What the law does say is this. The moment you formed your company, it became a separate legal person from you. That separateness is the whole deal: it is why your personal savings are protected if the business owes money. But it cuts both ways. Money sitting in the company's name belongs to the company, not to you, even if you own every share.
You cannot just help yourself to it. There are set routes for taking money out: a salary (which means the company registers as an employer and handles the tax), a dividend (only from profit the company has actually made), or paying yourself back for something you bought for the business. Take money any other way and you have borrowed it from your own company, which is called a directors' loan and has its own tax rules, explained in our director's loan guide.
And the company must keep records of all money it receives and spends, including bank statements, for 6 years. Skip that and HMRC can fine you £3,000 or have you disqualified as a director. Hiring help does not shift this: the records are legally still your responsibility.
Why does mixing company and personal money go wrong?
Because once both kinds of money share one account, every single line needs an explanation.
Say your personal account receives £2,000 from a client, then pays your mortgage, a supermarket shop and a £300 software bill. At year-end someone has to decide, line by line, which of those was the company earning, which the company spending, and which was just you living your life. Multiply by twelve months and the sorting out becomes a bigger job than the filing itself.
The sharper problem is the money you spent on yourself. Company money that went on your mortgage was not salary and was not a dividend, so it was a directors' loan whether you meant it or not, and it can carry real tax if it is not paid back in time. Mixing accounts does not make that rule go away. It just hides the running total until year-end, when it surfaces as an awkward number nobody was tracking.
A separate account makes all of this boring, which is the goal. Company money in, company money out, one statement telling the whole story.
What should I look for in a business account?
We do not recommend any particular bank, and you do not need anything fancy. Any current account in the company's own name does the job. Things worth comparing are the monthly fee (some accounts are free, some charge a few pounds), how easily you can download statements, and how quickly it opens. One thing to know: most banks' terms for personal accounts do not allow business use, so "I'll just keep using my own account" is usually against your bank's own rules, even though it is not against the law.
What has this got to do with filing my tax return?
Everything, if you want the easy version of filing.
Your company's year, told honestly, is just its bank statement: every sale in, every cost out. That is exactly where SimpleReturns starts. You upload the company's bank statement, we read it, and we ask you a few plain-English questions about anything unclear. That only works when the statement is the company's own story. If company and personal money are tangled in one personal account, no software (ours included) can honestly tell which line was business.
So open the company its own account, run everything through it from today, and your filing largely takes care of itself.