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Do you need to have a business account as a sole trader?
Thomas Vles
23 Jul 2025
6 minute read
Have you just started as a sole trader and are you wondering if a separate business account is really necessary? In this article, you will discover whether a business account is required, whether you may use a personal account for business purposes, and why a separate account for your sole proprietorship is often a smart move.
Is a business account mandatory for a sole proprietorship?
A business account is not legally required for a sole proprietorship. In theory, you can handle the income and expenses of your business through your personal account, but this is not always practical. Want to know more? Read the differences between a business account and a personal account.
Since most banks state in their terms that a personal account is not intended for business use, you are often contractually restricted in what you can do. Moreover, your accounting can become confusing when personal and business transactions are mixed.
Therefore, it is smarter to open a separate business account for your sole proprietorship, so you can see at a glance what is happening in your business. This saves a lot of searching and also gives a professional appearance to your clients.
Can you use a private account for business purposes?
The benefits of a business account for your sole proprietorship
Although you are not legally obliged to have a separate account for a sole proprietorship, opening a business account can save you a lot of time and hassle. Having a business account for your sole proprietorship offers the following advantages:
You get immediate insight into the financial health of your business.
Your financial transactions are clearly separated from your personal expenses.
Providing information to the tax authorities is quicker and easier.
You create a professional image for your clients.
Accounting and administrative processes become clearer and more efficient.
Business Account and the Tax Authorities
A separate payment account for your business gives you an immediate overview of all your business income and expenses. This is very useful when the tax authorities carry out an audit. You can then quickly and easily provide your documentation, as all your business transactions are clearly separated from your personal expenses.
Moreover, there is a retention requirement of seven years for administrative documents, so it is wise to keep your business cash flows neatly separated. This way, when necessary, you can easily meet all fiscal obligations and avoid overlooking important evidence or transactions.
Business Account and the Accountant
If you hire an accountant or another financial service provider to manage your finances, having a separate payment account for your sole proprietorship is particularly valuable. Since you receive all business payments and income in one account, the accountant doesn't have to sift through your personal expenses. This saves time and prevents errors in the administration.
A clear distinction between personal and business expenses can also lead to a lower invoice from your accountant, as the research work becomes considerably simpler. Thus, with a separate business account, you benefit from both cost and time savings.
GoDutch: the all-in-one business account for your sole proprietorship
GoDutch has been developed with one goal in mind: to save you time and money as a business owner. Instead of endlessly switching between different tools and providers, you can manage all your business finances from one smart app. Whether it’s processing invoices, managing payments, or sharing access with your accountant, you have everything at your fingertips.
You will receive a local IBAN and a business payment card within three hours, so you can start making and receiving payments immediately. Moreover, you benefit from smart automations that can save you up to 50–70% of your time on administrative tasks.
In addition to payments and administrative tasks, you can also collaborate with your accountant or financial advisor by easily setting up permissions and roles. With GoDutch, you work more efficiently, enjoy better oversight, and have more time left for what your business excels at.
