Do I really need a business bank account?
This is a question that crops up regularly in networking groups, and although it's not a legal requirement to have one (even for a limited company) my answer will always be, "You might not legally need one, but you should definitely want one".
"If it's not a legal requirement, why would I want to get one?"
I'll answer that with a question: when you're doing your bookkeeping, how long do you spend looking through your bank statements and picking out all the business transactions? If all your business transactions were sitting there in a separate bank account, your answer would be, "No time at all" - so the time you spent on your bookkeeping would be greatly reduced.
It would also be much easier to reconcile your account - that is, checking your bank statement against your books, making sure the balances at the start and finish of the month match what's in your accounts, which will highlight any transactions that may have gone through either twice or not at all. From a bank reconciliation, you'll also be able to check that all your customer payments and supplier invoices and expenses have been entered into your accounts correctly, which helps make sure all your tax returns (whether VAT or Self Assessment) are accurate.
"But banks charge for business accounts."
Some do, and some don't. Some offer free accounts for members of certain professional organisations (one example is the Federation of Small Businesses) and some have a fee-free period for a set amount of time after the account is opened. And the fees are usually relative to the size of the business.
For example, our bank didn't charge us any fees for the first 18 months, and now we pay £5.50 a month in bank charges.
Why is is more important for a limited company to have a business bank account?
As a sole trader, your business is technically you. You're personally responsible for all your orders being fulfilled and your suppliers and employees being paid. A limited company is a separate legal entity from its directors and shareholders, so it makes far more sense for it to have a completely separate bank account as well.
If you're currently thinking about whether you actually need a business bank account, I hope this has helped with your decision.