A business account is an essential tool for any business owner. Farmers might particularly benefit from a business account, as the time-consuming nature of their work can make financial management difficult. That said, farmers should ensure that they get the best business account available.

This article will list the features that you should look for in a business account for farmers. We’ll cover a couple of other topics too, including:

  • How can a business account help run a farm?
  • What should I look for in a business account?
  • What’s the easiest way to sign up for a business account?

How can a business account help run a farm?

Keep your personal finances separate

Some self-employed individuals resort to using their personal bank account for business transactions, as it can seem like a simpler option. While it might save a little time, the downsides aren’t worth it: if you don’t keep your business and personal money separate, your financial records will become very disorganised very quickly

If your records are disorganised, you’ll not fully understand the amount of money your business is making or spending. This lack of understanding could lead to overspending, which in turn can lead to serious cash shortages and even bankruptcy. This makes separating your personal and business finances one of the most important bookkeeping practices a small business  — such as a farm — could adopt.

There are few drawbacks to setting up a business account: it’s usually a very quick and easy process. Since your transaction history and financial information will be much easier to see and analyse, it can also help you make better financial decisions. This is enormously helpful if you are more focused on agriculture and have little experience in the business side of farming. 

Tax 

The amount of taxes you pay and the system you’ll use depends on how you register your 

business — that is, whether it’s a sole trader or a limited company. Paying the correct amount of tax is hugely important, as the government can charge you with tax evasion for intentionally paying less tax than you should.

On top of that, paying taxes can be very complex. One of the trickiest parts of paying tax is claiming back any business expenses. You pay money to HMRC for any profit you make, but you can reduce your tax bill by claiming purchases as business expenses. This means you’ll only pay tax on the profit you made and not on the cost of purchases necessary to run the business. 

For a farm, these expenses could be things like animal feed, tools, or fuel to run vehicles. You’ll likely have quite a few expenses as you’ll be working the farm every day, so fuel and feed will need to be purchased frequently. This is costly, but the advantage is that you can use those purchases to reduce your tax bill.

Without a business account, this can all get a bit confusing. Business accounts like Countingup help simplify things, as you can view and record your expenses easily when they’re all in one place. Countingup is especially helpful, as you can do all this with its easy-to-use app.

What should I look for in a business account?

MTD-compatible

MTD stands for Making Tax Digital, a government initiative to make HMRC a more digital-friendly institution. For small businesses, this will mean some big changes in the next few years.

One of the biggest changes is that businesses will need to file their tax forms digitally. While the changeover might sound inconvenient, the time-saving features that certain compatible accounting software tools offer mean that MTD can make doing taxes easier for business owners in the long run.

The other notable change is that there will no longer be an annual tax return. Instead, self-employed individuals will need to send information to HMRC four times a year. This doesn’t mean doing four tax returns, though. It just means sending financial data to HMRC on a more regular basis.

The rolling out of these changes will take place over a few years. In April 2022, VAT-registered businesses with a taxable turnover of less than £85,000 will need to submit their VAT return per MTD guidelines. Then in 2024, self-employed individuals and landlords making over £10,000 from businesses or properties will need to follow MTD rules when filing their income tax self-assessment.

MTD rules mean you’ll need to use MTD-compatible software when filing tax forms to HMRC. Since Countingup is MTD compatible, it’s fine to use it for any of the tax-related tasks we’ve listed above. Eventually, all businesses will need to follow MTD rules, so it’s smart to download and use the right software before you get left behind.

Accountant access

You’ll be in charge of your farm’s financial management most of the time, but occasionally you may have to hand over some responsibility to an accountant. Making sure they have all of your financial information can be complex and frustrating, but the best business accounts have a system in place to streamline this process.

Countingup, for example, has an Accountant Hub where an accountant can access their client’s data quickly and securely. Users simply send their accountant an invitation on the Countingup app, and the accountant can then find everything they need to do their job.

What’s the simplest way to sign up for a business account?

Running a farm means you’ll have a lot to manage and maintain, so your time will be incredibly valuable. When looking for a business account for your company, your priority will likely be an account that saves time and allows you to focus on farming rather than bookkeeping.

Countingup is an ideal solution. Not only is it a two-in-one business current account with built-in accounting software, it’s also easy to sign up. Simply download the app and follow a few simple steps.

Thousands of business owners use Countingup to make their accounting more straightforward. If you’re interested in a Countingup business account for your farm, click here to start your three-month free trial today.

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