New bank account

Here's how to set up a new bank account in FreeAgent.

I've already got a bank account set up.

When you first set up your business, you'll be guided through setting up the business's main bank account. FreeAgent treats this as your primary bank account, which means it'll put that bank account's details on the invoices you generate, so that your customers can pay you online.

But what if you've got more bank accounts to set up, such as a credit card account, or a deposit or savings account?

Here's how to set up one of those.

Click on Banking from the menu.

This brings up the summary of bank accounts. You can see that there's just one listed so far here under the graph, the account that you set up when you first started using FreeAgent.

1. Choose account type

Click the Add New button to choose what kind of an account this is. You can choose from Bank Account, Credit Card or PayPal.

2. Enter account information

FreeAgent then takes you to the New Account screen where you need to enter all the relevant information.

Personal or business account?

You can tick this box here to say the account is a personal account, that is, it's not a business bank account. This is for sole traders and partners who are running their business through a personal bank account rather than having a dedicated business bank account.

The differences on FreeAgent between personal and business accounts are like this. Firstly, if you're uploading your bank statements from online banking, you have to explain what every transaction is if the account is a business bank account (that is, this box is not ticked), but you don't if it's a personal account.

Secondly, you can't record money paid to a user from a personal bank account, because money transferred between personal bank accounts isn't part of the business's transactions. That's fine if you're a sole trader and the only user is yourself, but if you have employees, you would need to make sure the account is not set as personal so that you can record their salaries correctly on FreeAgent.

Primary account

You can also tick this box here to make this account your primary account, rather than the account you set up when you first started using FreeAgent.

That's handy if you have changed banks since starting to use FreeAgent and have a new business bank account.

Information required for uploading transactions

If you're going to be uploading your bank statements from Online Banking, then you'll need to put in your bank account number and sort code, so that FreeAgent can identify that you're uploading from the correct account.

Opening balance

Put in the balance of your bank account as at the start of the day on your FreeAgent start date. This will be the same as the balance at the end of the previous day. So if your FreeAgent start date is 6th April 2012, you'd put in the balance from your bank statement as at the end of 5th April 2012.

If you opened this account after the FreeAgent start date, then put a zero in the Balance box. You must put a figure in or you'll get an error message.

International banking

Under More Options, you'll find a place to enter international banking information.

If you want the international information to print on your invoices, make sure the contact's country is set as outside the United Kingdom.

Once you've finished entering all the details, click Create New Account to save this account and start working with it, or Cancel to close without creating the new bank account.

You're now ready to start recording transactions going through your bank account.

Why is it important to record bank transactions?

This is the foundation stone of your bookkeeping, as it's an important part of a tax inspector's checks to make sure that you've included everything from your business bank account(s) in your tax returns.

Once you've set up your new bank account, you can start entering your bank transactions; for example, upload them and then explain them, or enter them manually.