Do you have to open a professional account separately?🔎
Is opening a professional account required if you are starting out as a sole proprietor? What are the pros and cons of a business account for a sole proprietor?
Let’s start with the most important question: are you required to open a business account? The answer is simple: no, if you are a sole proprietor, you are not required to open a business account separately!
Doesn’t matter whether you are a self-employed student, self-employed student or self-employed in secondary occupation. As long as you are an entrepreneur with sole proprietors, opening a professional account is not required!
Despite not being required, it is highly recommended to open a business account. There are some important reasons for this
Why should you do open a business account for your sole proprietors?
1️⃣ Open an account to maintain financial summary
In practice , it is best to open a separate account for your sole proprietors. A first important reason for this is that it allows you to keep a better summary. With a separate account, you can easily see how much money is coming in and how much is going out again.
So this way, you keep better track of how much you have earned and how much you can spend. There is a separate account to pay your professional expenses and receive your sales invoices on. So it gives you a lot of peace of mind.
Tip:
Keep an eye on how much more taxes you will have to pay via Dexxter so that you keep enough reserve.
Don’t forget, with part of that amount you are still going to have to sponsor the government, so the balance in your bank account will not correctly reflect how much is left in the end. You will have to take into account social security contributions, personal income tax, vAT, etc.
To be well prepared for this, you can use Dexxter. The tool will automatically display the amount you need to keep aside.
2️⃣ Open an account to protect yourself from the taxman
So you open a professional account for the summary of your self-employment activities on the one hand. Yet there is a second important reason for opening a business account – the taxman!
This is because a tax auditor will only be allowed to check your business account. Which account is the business account is determined by which bank account you effectively use for your sole proprietors!
As soon as you start paying purchases for your sole proprietor with a personal bank account, this account also becomes a professional account for the tax authorities. This means that a tax inspector will also be able to inspect all bank statements from that account, even if it is actually your personal account.
Don’t have a business account?
Then the tax authorities can also check your personal account in full.
The reason why you paid with your private bank account plays no role in this: you bought something before starting up your self-employed activities, you were still waiting for the bank card for your professional account, you lost your bank card…
In theory, a tax auditor consequently has access to the bank statements from that private account for that specific year. Attention, however, the tax auditor only has access to the bank statements for that specific year (or years) targeted by the audit.
We should also add that, in practice, requesting the bank statements of a personal bank account is rarely done for tax audits. Even though a tax auditor has the legal right if you have (accidentally) paid using that personal bank account a few times.
An auditor looking into your personal bank account can obviously do no harm either if you have nothing to hide, but you might still prefer not to let an auditor look into your private bank account.
Transferring between a business and personal account?
Of course, you can always make transfers between a professional bank account and your private account. For example, did you make a payment in the shop using your private account, even though it was a purchase for your company? Then you can make a transfer from your professional account to your private account yourself afterwards, not required, but it’s always allowed.
Or did you transfer some money from your private bank account to your professional bank account in the beginning? No problem, you can feel free to return your starting capital from as soon as you are financially ready.
This will have no impact on your accounts or taxes, but that way the bank balances will match your own summary and feel again. Financial transactions do not impact sole proprietors’ accounts at all.
Tip:
Want to discover a bit more about how a sole proprietor works? Then discover the free quick course for VAT exempted sole proprietors and those subject to VAT.
Which professional account is best to open?
You can open a professional bank account with numerous banks, but for your sole proprietors you can simply open a second, traditional bank account in addition to your private account. It will cost you less than a professional bank account, while still giving you the advantage of separate professional and private expenses.
Just check whether you can take out loans for your company with such a classic account. Moreover, with a professional account you may get interesting extras: credit and prepaid card(s) for companies, mobile and online services for business banking, a professional savings account, etc.
Sometimes, as a start-up entrepreneur, you will have a pretty good idea of where you want to go and which bank account (and extra options) fit that. Sometimes not at all-and that can’t hurt, of course.
During your journey as an entrepreneur, you can perfectly edit your type of bank account (classic account or professional account) and even bank. Again, don’t worry about the impact on your sole proprietors’ accounts, there is none! Choose the account that best suits your activities.
Open a business account: online or in an office? ⚖️
You can do your bookkeeping entirely online, via Dexxter, for example. You can often open a private account online, but make sure you know in advance whether it offers all the features you need.
Opening a business account online is not as easy at every bank. Some banks require you to go to an office to open a professional current account.
If you still like to arrange a professional account online, opening a business account online with a mobile neo-bank might be an option: their apps are ergonomic, their rates interesting.
However, as a self-employed person you quickly run into limitations with neo-banks: you often cannot go into the red, you cannot use structured communications, you get a foreign account number… So for now, it is best to stay with a traditional bank, to open a (professional) current account, although they are also taking big steps quickly!
Opening a business account?
Feel free to compare professional accounts from KBC, Hello bank, Belfius or ING.
Can you have multiple bank accounts 💳
Of course, having multiple bank accounts is perfectly normal, both for personal and business purposes.
From a personal perspective, regardless of any business activities, it is perfectly normal to manage multiple bank accounts. This can be with the same bank or with different banks. It can be useful to organise your finances, specifically manage goals or simply to meet your personal needs.
The same goes for managing finances as part of a sole proprietors’ business. It is entirely possible to have multiple business bank accounts, regardless of whether they are with the same bank or different banks. This can help separate business transactions from personal finances, simplify tax matters and keep financial summaries.
Having multiple bank accounts provides flexibility and can contribute to effective financial management, both personal and business. However, it is important to examine any fees associated with these accounts.
Can you have a foreign account for your business? 🗺️
The same applies here: from a personal point of view, it is perfectly acceptable to have a foreign bank account, and this also applies to your sole proprietors.
In case you regularly do business with foreign customers from a specifically country, it can even be very useful. This allows international customers to make payments into an account that is familiar to them, which can make the transaction go more smoothly.
Moreover, having a foreign bank account can be useful when different currencies are involved. This means incoming payments are not automatically converted to euros, but remain in the original currency in the foreign bank account. This offers additional flexibility regarding exchange rates and timing of currency conversions. It can help you wait for favourable exchange rates before deciding to convert the other currency to euro.
Beware: reporting requirement for foreign accounts!
You must always report a foreign account in personal income tax, even if no transactions have taken place on this account. Here you only have to report the existence of this foreign bank account yearly in your personal income tax return.
How exactly do you have to report your foreign account? In part 1 of the personal income tax, you can click through to Box XIII, where you have to indicate code 1075 and then fill in the necessary details. This includes the name & first name of the holder of this bank account, the country where the account was opened and whether this bank account has been reported to the National Bank of Belgium.
Last crucial step!
Did you succeed in opening your (professional) current account? Enter the number of your business account in Dexxter online as well. This will put the correct account number on your invoices, credit notes, etc. Logical, but also required! It is also best to open your bank account before issuing your first invoices. That way, you avoid having to communicate a new account number afterwards.
There you are, you are already one step closer to a successful start of your self-employed activities, together with your new (professional) current account!
Wondering which other steps you need to complete? Go to the step-by-step plan for starters!
