Banking for freelancers: do you need a business account?

Banking for freelancers: do you need a business account?

Working as a freelancer is an experience like no other. For one, you are not bound to one company and workspace and free to choose the task that suits you better. But, on the other hand, you still need to pay a lot of attention to your income flows and ensure it’s secure at all times.

To keep your finances in check, you may consider opening a bank account for freelancers. And here’s where Genome’s team comes to help! In this article, we will list what things you need to take into account when choosing the best business bank account for self-employed people. We will also explain why you need a freelance bank account or a debit card for freelancers in the first place.

Do you need a bank account for freelancers? 

The short answer is yes, you do. It is hard to imagine freelance work without the ability to receive payments via digital means. Yes, some independent contractors still prefer accepting payments for their work only in cash. But it narrows them down to only a select few companies and local employment places. Meanwhile, the freelancer bank account will allow you to get payments to your account from multiple countries worldwide. And this is just the tip of the iceberg!

Speaking of, personal and business accounts for self-employed people are usually the same as the regular accounts. But, in some cases, bank accounts for freelancers offer additional services. 

Business account for freelancers or a personal one – which is better?

When you start freelancing, you usually take the business-first approach. Meaning you do the job and think of getting a payment later. In those cases, you ask a person you do work for to transfer money to your personal account. Now, doing so is not forbidden, but you’ll be much better off with a business account. How come? Let us explain further.

Business banking for freelancers allows you to take your career to another level as you stay in more control of your finances. The benefits of having a business account over the personal one include the following:

  • You won’t have to mix your business and personal funds. First of all, our accounting manager will be pleased with you not mixing personal and business transaction flows. Even if you don’t have an accounting manager, the business account will provide you with more comfortable options to pay taxes and make transactions by separating personal and professional finances.
  • Plan ahead. If your plans include working with the government sector at some point, a personal account really isn’t an option.
  • Advanced assistance. Generally, customer support for business clients is better, as business bank accounts for freelancers usually provide dedicated managers for each client.
  • Improve the credit history. A business account allows you to build up your credit history. Managing and maintaining your finances and paying all your bills on time can show potential lenders that you are a responsible person.
  • Avoid problems with your bank. Not all financial institutions allow mixing personal and business funds, so they can charge you or even cut all ties. So, a business account for freelancers is a safer option overall. 

As you can see, there are certain things that you can handle better with business banking for freelancers. 

The criteria for the best business bank account for self-employed

Banking for freelancers is common nowadays, but you need to assess your needs before selecting a suitable account. 

For instance, if you want to work within your country exclusively, take a look at local and small banks for freelancers. They have a specialization that provides much better conditions, their business depends on each client, so they try to give you full support with their service.

And, if you plan to go global and work with clients worldwide, you can try an all-in-one fintech company like Genome. It will allow you to access various transfer options with multiple currencies at hand – a notable feature the best bank for independent contractors must possess.

The availability of money transfer services is one of the most important things in business banking for freelancers, as you will have different employers in different countries. 

So, for instance, if your clients come primarily from Europe, SEPA payments are what you are looking for. If they are located in the US or Canada – you need SWIFT transfers. And, for employers from the UK – Faster Payments will be just great (but only if you are located in Great Britain yourself). So, in a nutshell, the more transfer options your freelance bank account provides – the better. 

Also, mind the currencies in which you can make transfers and store funds – choose what works for you best.

Speaking of, when selecting a business account for freelancers, the monthly fee is not the only thing you should worry about. You also need to pay attention to the transaction fees and yearly payments.

An online bank for freelancers might be a solution for you if you work remotely and would be sending and receiving many transfers a month. Not to mention that you won’t have to take time out of your busy schedule for bank branch visits.

Of course, before selecting a bank, ensure it actually works with independent contractors within your industry. And please, don’t underestimate reviews on the Internet. Sometimes it is the best criterion for a decision.

What if you still want to use a personal bank account for freelancers?

So, if you still want to use a personal account to accept transfers for your freelance work – you can do so. Make sure to find a reliable financial institution that allows such transactions.

We also recommend getting yourself a debit card for freelancers and don’t use credit cards for this purpose. How come? Well, just imagine your account mixed with your personal funds, transfers from clients, credit funds, and a certain amount for taxation. It will be a nightmare to manage. Your bank would not be pleased as well. Debit cards only use the funds that you have in your account, so you don’t have to worry about the interest the bank might charge you for using credit funds. 

Other important things for your personal bank account for freelancers include the following:

Take notice of the multi-currency feature in your account. The accounts and transfers must at least support US dollars and euros. SWIFT and SEPA transfers must be an option for your payments.

By the way, the transaction limit is very important when selecting a bank for freelancers. Don’t forget that you are using the account for both – private and business funds, and the transaction number will likely double.

In case of an emergency (lost card, blocking of the account, etc.), your bank must have customer support and many ways to reach the support team. 

Check out the terms and conditions. Some banks don’t allow personal accounts to be used for business purposes, so you can lose your account.

The best business account for freelancers and sole proprietor accounts for Ukrainians at Genome

Now that you understand what features define the best bank account for freelancers, we’d like to recommend Genome!

With us, you can experience all the benefits of an online bank for freelancers. Genome is an electronic money institution licensed and supervised by the Bank of Lithuania. Our team services individuals, companies, and merchants, so Genome is a great place to open a business account for freelancers. We operate in over 50 countries and territories, the complete list of which is displayed here. Let us walk you through the process. 

Starting a business account at Genome is simple, as we provide all our services online. All you need to do is:

  1. Go to my.genome.eu.;
  2. Enter your email/phone number and a password;
  3. Start the registration process – choose a business wallet option;
  4. Next, you will need to fill out some personal information and pass the identity verification by filming a video selfie;
  5. Next, you will need to enter some business details – note that you need to select the individual company option and choose the activity type.

And that’s all it takes! After Genome approves your verification, you get access to one of the best business bank accounts for self-employed people! 

First of all, there’s a multi-currency option. When you first start your business wallet, inside, you have one account in euros. But you can easily add more accounts just from the main Dashboard – you don’t need to provide any additional information. You can have up to 15 accounts within one wallet, five accounts per currency: EUR, USD, GBP. It will allow you to store funds in different currencies for your convenience.

Of course, transfers are one of the main features of a business account for freelancers. And Genome has you covered here! We offer SEPA, SWIFT, Faster Payments, and internal transfer options. Let’s quickly go through them.

SEPA payments are used for people and companies within the SEPA zone, which covers all the members of the European Union, as well as Switzerland, Liechtenstein, Andorra, Iceland, San Marino, Norway, Vatican City, the UK, and Monaco, so 36 countries in total. All the transfers are made in euros, so it is a great option if you work in Europe.

Another option that the best bank account for self-employed must have is SWIFT. SWIFT transfers are international payments available almost worldwide. Genome allows you to send and accept transfers in euros, British pounds, and US dollars. We also apply the SHA payment instruction, meaning that our clients only pay the fees for the outgoing transfers, while the beneficiaries handle all the charges of the intermediaries. You can find the full list of countries allowed for SWIFT transfers inside Genome here

Faster Payments allows sending transfers within the UK. Though they are only made in British pounds, they are much quicker than any other option listed before – some of them will reach the beneficiary within minutes. So, if you and your employers are situated in Great Britain, definitely try these.

Last but not least, we have internal instant transfers that can be sent between the Genome users. 

How do you access all these transfer options from your freelance bank account? Go to the main Dashboard and click on the Transfers tab. Go to the Bank transfer section for SEPA, Faster Payments, and SWIFT payments or to the Genome transfer section to send instant internal transfers. Also, you can send out mass payments if you need to. 

Note that Genome has limits on incoming and outgoing payments. When you start a business wallet, your basic limit is 100 000 EUR for incoming and 100 000 EUR for outgoing transfers. You can easily increase said limits. To do so, go to the Settings tab, and select the Limits section. Fill out the application to increase the limits, and we will review it in one to two business days. 

Need a freelancer debit card? Genome’s got you covered! Our platform provides both virtual and physical debit Visa cards. What is the difference?

The virtual cards exist exclusively in a digital form, meaning you can pay with them online. Or, you can use them for contactless payments via Google Pay, Apple Pay, or Garmin Pay. The virtual card will be available once you order it. 

Genome’s contactless physical debit cards can be used as regular Visa cards – at any store or place worldwide where Visa cards are supported. You can also use them for online purchases. Once you order your physical card, you can start using it online while we deliver it. The delivery is available inside the EU. Use your freelance debit card to spend your income on purchases and necessary payments.

These are some of the primary features you need from your bank for freelancers. But Genome has so much more to offer!

For instance, if you, as an independent contractor, have a partner that works with you, you can allow them to access your business account. It is all thanks to our shared access feature called My team. With it, you can invite other members of your team via a link, so you can share the workload and manage your funds together.

Another crucial mark the best bank account for self-employed people must hit is security. Genome follows strict regulations and is PCI DSS, PSD2, and GDPR compliant. We enable two-factor authentication every time our clients log into Genome, as well as for all outgoing transfers. Not only that, but our business wallet users can get a Genome token. It is a small device that allows approving all outgoing payments remotely. So, you get a second layer of protection, as the transfers require double authorization.

Last but not least, if along the way in your freelance career, you decide to start a website to accept payments from customers, Genome’s got what you need! We provide merchant accounts, which will allow your clients to pay for your goods and services in 20+ currencies. For this purpose, they can use major card brands or over 40 alternative payment methods we offer. And, of course, multiple reports on transaction flows, chargebacks, and so on!

Genome’s special initiative for Ukrainians – bank account for self-employed

In 2022, Genome made its contribution to helping Ukrainian people who have been facing the atrocities of the full-fledged Russian invasion. We donated to the country and allowed Ukrainian citizens to join Genome and start personal accounts. 

Want to help the Ukrainian people? You can donate to the cause on this page

A bit later, our team enabled special sole proprietor accounts, so Ukrainians could receive income in euros and make payments when abroad or at home. The sole proprietor account can be used as a banking option for freelancers as well.

If you are from Ukraine, here’s how you can apply for the said account:

  1. Go to my.genome.eu;
  2. Enter your email/phone and come up with a secure password;
  3. Choose the personal wallet option;
  4. Enter the required information about yourself;
  5. Pass the identity verification – you will need your ID and phone to record a quick video selfie.

Once you’ve got your personal wallet, go to the main Dashboard and click the plus sign in the upper left corner near the personal accounts section. When there, select the Sole proprietor account and open it. 

To start getting payments, you need to go to the Dashboard and click the Account details button for your sole proprietor account. Copy the details and send them to the person/employee/financial department you want to accept transfers from.

The sole proprietor account makes banking for freelancers easy! With it, you can receive income in euros. Transfer the money received to your other Genome accounts using our internal transfer or to other banks via SEPA. You can also order our cards and make purchases with them. For more information on sole proprietor accounts, check out this blog

FAQ

Which bank account is best for freelancers?

As we explained in the article, you can use both personal and business accounts for the purpose, although the business account is preferable for income separation and taxes. The best bank for freelancers will be the one that offers multiple money transfer options and has a dedicated support team with numerous communication channels. Also, before selecting a bank, make sure it supports the freelance industry you work in. 

Does freelancing need a bank account?

Yes, because it is more convenient to receive payments for your work via transfers, especially if you work for people from around the world. Genome is perfect for such a job, as we offer SEPA, SWIFT, and Faster Payments. We also have virtual and physical debit cards for freelancers.

Can a freelancer open a bank account?

Yes, of course. Many financial institutions allow you to do so. Genome, for instance, provides one of the best business accounts for freelancers, which we described in great detail earlier. 

Should the self-employed consider using digital banks?

Yes, they should. Online banking for freelancers is very convenient, as you don’t need to visit bank branches and can manage all your accounts from the comfort of your house.

What account do I need for self-employed?

You can have a personal or a business account, it is up to you. Although, we recommend starting a business account for freelancers, as it is more secure and allows them to separate personal funds from business ones.

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