Using normal current accounts instead of business accounts?

tomy.j

My wife and I run a small business and we are reaching the end of our 'free business banking' with LloydsTSB. I have heard before that you can legally use a normal current account to hold your business money, therefore not having to pay 0.50p per cheque written etc.
I was therefore wondering if anyone has done this, and how they get round having merchant payments paid into the current account? Do the banks start asking qu's? If they do ask if your running it as a business account, and you answer 'yes', are you then in the poop?
Would appreciate any help, thanks v much.
Thanks also to everyone on this site, been reading some really good gen on here for the last couple of days.

spook

I was hoping someone would answer this as I'd like to know too!

I did find some information in this thread though, if that's any help.

grumpyoldgit_2

Why not just open a business account with another bank?
Abbey are offering free banking forever if you stay within certain limits - have a look at:
http://www.anbusiness.com/
We have just changed from Co-Op - so far so good

There are other threads re this on the small biz board - you might do better posting on there

Cheers
GoG

M_Thomson

tomy.j wrote:

My wife and I run a small business and we are reaching the end of our 'free business banking' with LloydsTSB. I have heard before that you can legally use a normal current account to hold your business money, therefore not having to pay 0.50p per cheque written etc.
I was therefore wondering if anyone has done this, and how they get round having merchant payments paid into the current account? Do the banks start asking qu's? If they do ask if your running it as a business account, and you answer 'yes', are you then in the poop?
Would appreciate any help, thanks v much.
Thanks also to everyone on this site, been reading some really good gen on here for the last couple of days.

When you have a current account, most banks will put something into the terms and conditions to say that you are not to use it for business purposes.

tomy.j

thanks guys for your comments, will look at all ideas.

jonesMUFCforever

Agree with what has been said in above postings. You might get away with paying the odd cheque and small amounts of money through a personal account but credit card transactions would give the game away straight away.
Just ask yourself are you happy with the service provided with your bank, from the counter service to your business manager? If so why change? You might not get the same service elswhere.
Final point - your bank charges are legimate expenses and could be offset against your profits for tax purposes on a business account.The charges are also negotiable (in theory anyway) basically the bank will have 'costed' how much profit or loss you are worth to them. If they make money out of you they will not want to lose you. If by being prudent they are making nothing out of you or it costs the bank money to hold your account then they may not care if you close the account or not.

redux

It probably depends most on the level of usage. I have been doing this for 10 years, but make well under 100 transactions a year.

I think if you have merchant payments coming in, which you seemed to mention, then this would imply much higher level of use. Find a bank with free business banking.

Caped_Avenger

tomy.j wrote:

Do the banks start asking qu's? If they do ask if your running it as a business account, and you answer 'yes', are you then in the poop?

Yes, banks do watch out for personal accounts being run as business accounts for a simple reason. By allowing someone to operate a personal account as a business account, they are losing out on the opportunity to charge you for the services.

I can't speak for all banks, but some will give you 30 days notice to close the account and charge you for having used the account as a business account. They don't need concrete evidence either, a stong suspicion is enough.

auturmnsolaris

grumpyoldgit wrote:

Why not just open a business account with another bank?
Abbey are offering free banking forever if you stay within certain limits - have a look at:
http://www.anbusiness.com/
We have just changed from Co-Op - so far so good

There are other threads re this on the small biz board - you might do better posting on there

Cheers
GoG

I've had a good look at that site, and it appears that it's staying within limits..are those limits just those imposed on the number of cheques etc paid in..or is there a limit on how much or little you have in the account?

grumpyoldgit_2

As far as I know as long as you are in credit and stay within the transaction limits = free banking
That's why I moved from Co-Op could not keep the required £2K in the account and was paying heavy charges