When many people start out on their own, opening a business bank account is one of the first things on the ‘to-do’ list. As the business grows, it may seem a good idea to open more accounts.
Can you legally have multiple business bank accounts as a sole trader? And more importantly, should you?
In short: yes, you can.
There’s no rule preventing sole traders from opening more than one business account. In fact, there are several good reasons why having two (or more) accounts can make your financial admin a lot easier.
Why have more than one business bank account?
Many self-employed individuals maintain a single account for all transactions, including client payments, software subscriptions, taxes, and occasional business expenses, such as coffee purchased with a business card.
A single account is often sufficient for many people, but things can become complicated.
If you split your finances into different accounts, you’ll be able to:
- Track spending more easily
- Ringfence your cash for tax, savings, or to cover emergencies
- Prepare for and meet your VAT or Self Assessment liabilities, including payments on account
- Keep client funds separate (especially if you handle deposits)
- Test out a new bank without switching everything at once
Many sole traders use the “pot” system, which separates their income into categories, and this becomes easier when you use multiple accounts or digital banking tools that support it.
If you’re in a regulated sector with specific client money rules, check whether you need a designated client account rather than simply using a second business account.
What is HMRC’s view on multiple accounts?
HMRC doesn’t insist that sole traders use a business bank account – it’s not a legal requirement after all.
However, it does keep your business and personal finances separate. It also makes life easier in the long run.
The main thing you need to do (especially if you have to comply with MTD for Income Tax) is to keep complete and accurate business records. It doesn’t matter how many business accounts you have.
When does it make sense to have multiple accounts>
1. To separate working capital from future tax liabilities
Many self-employed people set aside a specific amount of funds to cover future tax bills (income tax, NICs).
A second account is used specifically for tax, and nothing else. It’s harder to accidentally spend if it’s not in your main account.
Free business account – no credit check. Ideal for sole traders.
Having a separate account also removes the temptation to use money which you’ll need to pay HMRC in the future.
You can easily tag or separate ‘pots’ with our banking partners, Zempler and Tide. So, you don’t even need to open a separate account in many cases.
2. To manage savings or significant expenses
If you’re putting money aside for equipment, pension contributions, or simply to cover a quieter period, it can help to keep it in a separate account.
Some business banks offer linked savings accounts. Our partner Tide offers competitive interest rates, and you can open a savings account as soon as you’ve opened your current account.
Another option is to open a second current account and treat it as your “equipment” or “buffer” pot (see above).
Just be aware that some traditional banks charge extra if you hold more than one account.
3. To test or switch providers
If you’re unhappy with your current bank (due to poor customer service or outdated technology), you can open a new account alongside your main one, giving you a chance to try it out before making a complete switch.
If you’ve always used a traditional high street bank, this is a great reason to try one of the new digital providers, without any outlay or hassle.
You can set up an account in minutes, try a few small transactions to see how the process works, and try out some of the new account’s features.
When you’re ready, see our guide on how to switch business bank accounts as a sole trader.
4. Splitting different income streams
Many people run more than a single type of business or activity – perhaps they sell online, and also work as a part-time web designer. It makes sense to separate transactions for each activity
It helps you track what’s coming in from each source, manage expenses more clearly, and avoid confusion when it’s time to do your accounts.
It’s also useful if you want to analyse which activities are the most profitable, or work out any other type of metrics.
Can you use your personal account instead?
Technically, yes you can – but it’s not recommended.
Most high street banks state in their terms that personal accounts shouldn’t be used for business purposes.
And if you’re ever applying for funding, using accounting software, or signing up for digital tax tools, you’ll usually need a dedicated business account anyway.
That’s why the new wave of digital banks has been so successful.
They’re built with sole traders in mind, don’t require a limited company, and offer built-in features such as invoicing and real-time spending breakdowns.
They also seamlessly integrate with accounting software such as Xero (30-day free trial) and QuickBooks.
Do you need to tell HMRC?
No. You don’t need to tell HMRC how many business accounts you have.
When completing your Self Assessment, you report your total income and allowable expenses – which bank accounts these transactions occurred in is irrelevant.
However, if you ever apply for a mortgage or a grant, lenders might want to see statements.
See our guide to what counts as proof of income for sole traders, so it’s wise to keep your accounts clean and consistent.
Tips for managing multiple accounts
- Use accounting software that supports multiple bank feeds, so you’re not tied to a single bank – see our best accounting software for sole traders
- Keep clear notes when you transfer funds between different accounts
- Label your accounts in your bookkeeping software (e.g. “Trading”, “Tax”, “Savings”)
- Regularly reconcile all balances – not just your main account. You might have to do this manually if one of your accounts isn’t part of Open Banking.
To summarise
You’re free to open and use multiple business accounts as a sole trader, and doing so can actually make things simpler.
Whether you want to manage tax more effectively, ring-fence savings, or try out a new bank like Zempler or Tide, having more than one account is completely allowed – and in many cases, a smart move.
If you’re still deciding which account to go with, take a look at our updated comparison table.
