Business bank account - Savings account

[New2011]

Hi all,

Im pretty new to contracting world and wanted to ask about business savings account. I have a Ltd company setup.

Are business savings account worth having?

Why would I need one ? or why would a contracting company need one?

[SueEllen]

The old reason to have them was so you could get more interest on your money.

Now they are only useful for separating your money out i.e. so I know x amount has to be reserved for VAT, corp tax so put it in there.

[BA to the Stars]

WSES

I operate one for VAT and one for Corporation Tax. Funds go in there upon receipt of invoice (remember - when you get your funds, a proporation will "belong" to the tax man so it is as well to move it out of the company account and out of site until you need to pay the tax man).

In my companies first year of providing contracting services, it earned over £500 interest, last year it was £10. Similar amounts deposited, just the way that interest rates are at the moment.