Business bank accounts for small businesses and freelancers

18.07.2019

Whether you’re a freelancing guru or someone who has just started out on their own, the one thing you’ll need to keep in mind as you manage finances is a bank account. What, where, and how? We’ve got you covered! Read on to find out more about banking for freelancers!


Working for yourself can have many benefits. From working your own hours, and being your own boss to not needing to seek permission from upper management, to extra free time - many freelancers enjoy being in complete control of their businesses and lives.

As with any advantage though, there are some drawbacks to think about. One of the main issues as a freelancer or self-employed person is managing your finances. Whether you’ve been freelancing for over a decade or are a newbie, first things first, you’ll need a bank account.

Now the questions arise…

  • Do I need a separate bank account?
  • What type of bank account?
  • Which bank?

Well, we’re here to help! We’ve listed down a few tips to help you navigate managing your own finances and deciding on opening a business bank account.
 

As a freelancer, do I need a separate bank account?

Although it’s not mandatory to have separate bank accounts for your personal needs and your freelance business, it’s highly recommended!

Hint: You need a separate bank account if you are operating your business as LLC.

Having all personal and freelance expenses and income together will mean that your freelance expenses will be mixed with your electricity bill and this will translate in more difficulties doing your accounting. Having separate bank accounts will become useful to complete tax returns or to prove the tax office that everything is well recorded in case of an audit.

Creating a business bank account shouldn’t be complicated but sometimes it comes along with higher fees. In some countries, just opening a second personal account just for freelancing purposes will work as well but in other countries, e.g Germany you will need a business bank account for your freelance business.
 

Benefits of having separate bank accounts (personal vs business):

  • Easier for your accounting
  • Quicker for tax purposes
  • Clear separation of what your business is doing
  • Adds professionality in front of clients

 

 

So, what should you look for when selecting a bank account?
 

  1. Internet and phone banking - As a freelancer, expect to conduct the majority of your transactions online. Having a bank account that offers superior online and phone banking services would be beneficial.
     
  2. Interest Rates - This one’s a no brainer. Compare available options and choose a banking system that offers competitive interest rates in case you need a credit for starting/improving your business.
     
  3. Fees - As a freelancer, you can expect a fair amount of client bank transfers. This is not always cheap. Consider what you’ll be charged when receiving payment from a client also if there are maintenance fees, etc.
     
  4. Limits - Another important aspect to look at are bank limits. This refers to the maximum amount you can withdraw, transfer, send or receive and/or the total number of transactions in a day, week, or month. This differs from bank to bank so it’s crucial to find a plan that works with your specific business’s financial model.
     
  5. Extra services for freelancers - Take a look at the extra services that they have for a business. E.g. you’d probably find it useful to get notified when a payment comes in your bank account. Another great extra would be the possibility of integrating with your accounting software.
     
  6. Support - Having the right kind of support is absolutely crucial to a freelancer when choosing a bank. Delayed transfers - incoming or outgoing, missing payments, etc. can be a hassle to deal with. You want to look at banking options that provide 24x7 support to help you deal with any issues that may arise. 
     
  7. Getting paid while traveling - Are you always finding yourself on the go? Some freelancers enjoy the freedom of freelancing by traveling around as much as they can! Here, you should check out if a credit/debit card is included, how much do the bank charges for withdrawing money abroad, etc.

 

What are the best business bank accounts for freelancers?

From some years now, we have been experienced a tendency towards online banking. Most traditional banks adapted to this trend and offer online access to checking accounts but regularly their fees are still pretty high.

Freelancers and digital nomads are tech-savvy and often on the go and are not happy with banking fees, bad exchange rates or high transfer fees.

With this scenario, the FinTech banking industry is growing fast and new products are being developed especially for freelancers and small business. We’ve rounded up some great banking options below for you to look through.

 

Best Banks for Freelancers

Best Banking Options for Freelancers

  1. Qonto - With a 30-day free trial, freelancers can try out Qonto’s plan before deciding. Freelancers receive 20 inbound or outbound transfers each month and unlimited card transactions making this particularly lucrative for freelancers who are constantly on the go.
     
  2. N26 - Originally launched in Germany, N26 has quickly risen amongst the ranks to be an innovative and game-changing banking option across Europe. With plans to start functions in the US this year, this is a bank to watch out for. With the free plan, you have virtually zero banking costs be it in terms of ATM fees, transfers fees, or the like. With their offer, you’ll get travel insurance from Allianz and a 0,1% cash-back on any purchases made using your card (also free).
     
  3. Holvi - Holvi provides freelancers with the option to open a free Business account “Builder” and further accounts with extra features. Freelancers can store receipts and have the ability to generate bookkeeping reports. This can be pretty useful when creating invoices for clients! Furthermore, with their Grower account (€9/month), you can create, send and track invoices right from your account. Free unlimited bank transfers within Europe.
     
  4. Penta Bank - Penta brands itself as a comprehensive business bank. With 3 account types to choose from, whether you’re a freelancer or a small business owner, there’s something for everyone. Freelancers receive 50 free transfers each month with the free plan and unlimited card transactions.
     
  5. Monzo - Based in the UK, Monzo is a particularly great option for British freelancers. Easy setup, Zero card fees, plus a great user-friendly app makes this one of the best options out there. You can connect accountancy tools Xero and FreeAgent with the Monzo app.  24/7 customer support through the app
     
  6. Revolut - Revolut is one of the most travel-friendly banks out there. They use interbank exchange rates, with a small 0.5% fee for anything above £5,000 each month when it comes to transfers. Revolut also provides a comprehensive insurance plan for its users!
     

Transferwise: Transferring money no matter where you are

Another great option for freelancers is Transferwise. Initially, they offered a cheap option to transfer money abroad but they expanded their product with their Borderless account.

Regardless of where you live, you can create a "seemingly local" bank account in countries like the USA (USD), UK (GBP), Germany (EUR) and 28 different currencies.

The "seemingly local" comes from the fact that people can send you bank transfers as if you were a native there and had a real account. All you have to do is give them your account number and that's it. You can open a Borderless account for free (please note that Transferwise is one of our partners).


We hope this article was helpful! If you know or use any other freelancer-friendly bank, please let us know. We’ll be happy to update the article with more interesting options.

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Comments

  • Commented by Mathew Wade on 02.08.2019 at 09:24 h

    I use Starling for my business account activity. It lets me get paid in any currency, there’s no monthly fee and the conversion rate is near commercial. You get a debit card and you can sign up with in 10 minutes from your mobile and start using your account AND CARD right away as they send all this to your digital wallet. You can also open personal, joint and Euro and transfer for free between them all. Check them out (PS I do not work for them, this is a genuine impresses customer, OF A BANK!!!)

  • Commented by Natalia | freelancermap.com team on 02.08.2019 at 09:45 h

    Hey Matthew, thanks for your comment and the suggestion.

    Is everybody able to sign up for Starling? Or is it limited to people living in the UK? On paper it sounds like a great product and it’s great to hear that you’ve had a great experience as well. We'll definitely check it out!

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