Can I sole trade with a personal account?

TriciaW · 2 October 2014 at 2:57PM

Hi
I want to start a business as a dog walker. I want to have a separate account. The moment I mention a business the bank wants me to open a business bank account. I have heard there is no legal requirement for me to do this though. This is not going to be a full time job so I estimate my income to be less than £300 a month, certainly at the moment it is less than £50 pm
Advice please?

Tricia

PlutoinCapricorn · 2 October 2014 at 3:08PM

Many sole traders use their existing personal accounts for their freelance earnings and get away with it - I do it myself.

However, this would not work if you paid in loads of cash, if you have a lot of transactions or have a trading name.

phill99 · 2 October 2014 at 3:25PM

Its against the terms and conditions if personal sccounts to be used for business.

Hoeever a lot of people do.

I think its more professional. For instance if you trade as 'ace dog walkers' and then ask your customers to make cheques out to 'john smith' it looks unprofessional and people often think you are pulling a fast one.

InsideInsurance · 2 October 2014 at 4:47PM

There is no legal requirement, as in a statute of law, to have a separate account or a business account because legally as a sole trader there is only you

Whilst there is no statute requiring you to do this the terms and conditions of virtually every personal current account forbid its use for business activities and so to use it as your businesses account would be in breach of the terms and conditions and the bank would be entitled to take action as a result of that breach.

In practice it comes down to how likely they are to catch you at it. As said, many who dont read contracts etc do use a personal account to avoid the fees of business banking.

Whilst not being able to accept cheques in the name of the business may be an issue for some companies I am not sure how "professional" the OP is trying to present their dog walking business such that this may be an issue.

PlutoinCapricorn · 2 October 2014 at 7:33PM

Yes, it is all very well for consultants who operate under their own name and have one or two payments per month (not in cash) to use their personal accounts as this is not a business business but a person who happens to be paid gross. Someone who has a trading name and pays in frequently, sometimes in cash, is going to trigger the business rules.

leveller2911 · 2 October 2014 at 7:56PM

I've been trading under my own name for decades via a personal account. A few years ago my bank (HSBC) contacted me offering me a business account which I took up. The problem I found was the business cheque books don't have anywhere to log each cheque written out , log income / expenditure and generally keep track of the account. It was just full of huge cheques.....

I had a chat in branch and they were happy to put me back on a personel account. I get on really well with my local branch and have always found them helpful with my business.

I'm staying firmly with a personel account.

Aquamania · 3 October 2014 at 9:49AM

TriciaW wrote: »

Hi
I want to start a business as a dog walker. I want to have a separate account. The moment I mention a business the bank wants me to open a business bank account. I have heard there is no legal requirement for me to do this though. This is not going to be a full time job so I estimate my income to be less than £300 a month, certainly at the moment it is less than £50 pm
Advice please?

Tricia

As others say, it is not a matter of the law, but a simple matter of the terms you agree to abide by when you use a bank account.

All banks I know of prohibit in their terms the use of personal current accounts for business purposes.

So read the terms

Whilst the bank may close an account being used against the agreed terms, the usual recourse (where available) is to transform a personal account into a business one if/when the bank discovers it it currently being used for business.

Aquamania · 3 October 2014 at 10:00AM

leveller2911 wrote: »

I've been trading under my own name for decades via a personal account. A few years ago my bank (HSBC) contacted me offering me a business account which I took up. The problem I found was the business cheque books don't have anywhere to log each cheque written out , log income / expenditure and generally keep track of the account. It was just full of huge cheques......

I don't know why that was. :huh:

When we had an HSBC business current account, the chequebook was similar to a personal current account chequebook, with the usual counterfoils - the only signficant difference was that the chequebook contained 100 cheques rather than the 25 more typical in a personal account.
(In fact the cheques were slightly bigger
A personal HSBC cheque was 75mm x 155mm + counterfoil
A business HSBC cheque was 90mm x 165mm + counterfoil)

Perhaps you didn't make it clear from the outset what type of chequebook you desired? I know I had a similar issue with Lloyds when I first opened a personal account with them.

martindow · 3 October 2014 at 10:19AM

It can make your accounting easier if everything goes through a single account and doesn't get muddled with personal expenditure. As has been said you may well get away with a personal account if you don't have lots of transactions that flag it up as a business.

Percy1983 · 3 October 2014 at 12:18PM

As a sole trader any invoices should state your name anyway ie, Bob Smith trading as Bobs Dogs.

So with that to then ask for a cheque to be made out to Bob Smith isn't a huge problem.

As said if its just a small amount of transactions your bank probably won't notice or even care if they do, yet it may be against terms and conditions but it isn't legal problem as such.

thenewbee · 23 October 2014 at 10:41PM

I'm a dog walker and use my personal account. I get paid about 50% in cash, 50% BACS transfers. I have a spreadsheet showing all monies paid to the business with overdue invoices in red so I can keep track. Had no issues with any customers thinking I'm unprofessional.

Can I sole trade with a personal account?

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