Do hairdressers in the UK need a business bank account? What it changes for tax, payments and growth, plus how to choose and open the right account with confidence.
Getting your salon finances in order
Running a hair business is creative, fast paced and personal. It is also a real business with money in and money out that HMRC expects you to record accurately. If you are a sole trader, you are not legally required to open a business bank account. If you trade through a limited company, you should use a dedicated business account because the company is a separate legal entity. In practice, many banks do not allow regular business use of personal accounts and may restrict or close them if terms are breached.
Keeping business money separate makes everyday life simpler. It is easier to see what you are earning, what you are spending and what you need to set aside for tax. It also helps you present a more professional experience when clients pay by card or book online. This guide explains the essentials in plain English so you can decide what suits your chair, chair rental or salon setup.
A clean bank trail helps you stay compliant, save time on admin and feel in control of cashflow.
Who will find this useful
Whether you rent a chair, visit clients at home, or run a growing salon with multiple stylists, this guide is for UK hairdressers who want clarity on when a business account is required, when it is recommended and how it can help with card payments, Self Assessment and planning ahead. New starters and experienced stylists considering a switch will both benefit.
What a business account changes for hairdressers
A business bank account separates your trading money from your personal spending. For sole traders, it is optional but strongly recommended. For limited companies, it should be the only account used for company income and expenses. Many banks prohibit business activity on personal current accounts, so using a separate account reduces the risk of freezes or closures.
From day one, a dedicated account creates a clear record of takings, rent paid to a salon owner, stock purchases, colour, tools and insurance. This clean data supports your Self Assessment, makes it easier to evidence allowable expenses and shows genuine self-employment where that matters in salon arrangements. It also unlocks more professional payment options. Providers commonly require a business account in the trading name if you want card settlements, bank transfers or cheques to be accepted as “Glow Hair Studio” rather than your personal name.
How to set one up - step by step
Opening a business account in the UK is usually straightforward and often fully online. Expect to provide photo ID, proof of address and basic business details such as your trading address, expected turnover and whether you are a sole trader, partnership or limited company. Limited companies will also need Companies House details and may be asked for tax registration numbers. Accurate information from the start helps avoid delays or account checks later, especially if you handle cash or expect high card volumes.
Many stylists compare traditional high-street banks with app-based providers. High-street options often include branch services for cash deposits and introductory free banking periods. App-based accounts tend to offer low fees, instant notifications, built-in invoicing and smooth links to accounting software.
Common choices at a glance
| Provider type | Typical strengths | Watch-outs |
|---|---|---|
| High-street banks | Branch cash deposits, in-person support, overdrafts | Cash deposit fees, paperwork, shorter free periods |
| App-based providers | Low or no monthly fees, invoicing, expense tools, fast setup | Cash deposit limits via Post Office or PayPoint, paid add-ons |
Bold but balanced move: choose based on how you actually trade - cash heavy, mostly card, or fully cashless.
Why it matters for tax, payments and growth
If you earn more than £1,000 a year from self-employment, you must register for Self Assessment and report income and expenses. HMRC does not insist that sole traders use a business account, but it does expect accurate records. A dedicated account gives you a clean audit trail that supports expense claims for rent, products, utilities, insurance and professional services.
As cashless payments become the norm, a business account in your trading name is often needed to accept card settlements, payment links and bank transfers professionally. This is especially important for higher value colour services, bridal work and packages where clients expect seamless, secure payment options.
Visibility over money in and out helps you plan. With business income in one place, it is easier to set aside money for tax and VAT if registered, track quieter periods and decide when to invest in new chairs or a refurb. Clear statements can also strengthen applications for overdrafts, small loans or grants when you want to expand.
Pros and cons
| Pros | Cons |
|---|---|
| Cleaner records for Self Assessment and VAT | Possible monthly account fees |
| Easier to evidence allowable expenses to HMRC | Transaction and cash deposit charges |
| Professional payments in your trading name | Extra admin if you rarely trade |
| Helps show genuine self-employment in salons | Account checks for high cash volumes |
| Integrations with accounting software | Switching takes planning to avoid downtime |
| Bank fees often allowable as business expenses | Different pricing tiers can be confusing |
Pitfalls to avoid
Check your personal bank’s terms if you are still using a personal current account for business. Many do not allow it and may restrict the account without notice. When applying, be accurate about cash handling, card volumes and your business model so the bank can apply the right checks. If you trade as a limited company, do not run company money through a personal account - it creates compliance and accounting issues.
If your salon is cash heavy, understand deposit routes and fees. Some app-based banks use the Post Office or PayPoint with limits and per-deposit charges. For stylists operating mostly cashless, look closely at card processing costs, settlement times and whether your booking software integrates smoothly. Finally, remember that business banking fees and interest on business loans are often allowable expenses, but you still need proper receipts and reconciliations.
Practical alternatives if you are not ready yet
- Keep your personal account for living costs only and open a low fee business account for trading.
- Use a separate personal account purely for business as a short-term stopgap, then switch to a business account - but check your bank’s terms to avoid breaches.
- Adopt app-based business banking first for speed, then add a high-street account later if you need branch cash services.
- Pair your account with simple accounting software to automate categorisation and tax estimates.
Next steps: list your typical payments, compare fees and deposit options, gather your ID and apply online in under 20 minutes with most providers.
FAQs
Do self-employed hairdressers have to use a business bank account?
No. Sole traders are not legally required to use a business account. It is strongly recommended for clear records and easier tax returns. Limited companies should use a dedicated business account.
Can I accept card payments without a business account?
Often not in your trading name. Many providers require settlements to a business account matching the trading name. Using the right account gives a more professional and consistent client experience.
What documents will I need to open one?
Typically photo ID, proof of address and basic business details such as trading address and expected turnover. Companies need Companies House information and may be asked for tax references.
Are business banking fees tax deductible?
Usually yes. Business account fees and related charges are generally allowable expenses, which reduce taxable profit. Keep accurate records to support your claim.
How does a business account prove I am genuinely self-employed in a salon?
Having your own account, plus your own insurance and tools, is one sign that you operate independently rather than as a disguised employee. It supports your position if questioned.
How Switcha fits in
Choosing the right account should be simple and confident. Switcha will connect you with the best options for what you are looking for, whether you need cash deposit access, low fees or smooth software integrations. We stay neutral, explain the trade offs clearly and help you switch with minimal disruption.
Important information
This guide provides general information for UK readers and is not personal financial or tax advice. Banking features, fees and eligibility change, and your circumstances matter. Speak to a qualified accountant or adviser before making decisions about accounts, tax or legal status.
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