Small Business Bank Accounts Discussion Area

cardiffaccountant

Martin indicates that you can use your personal bank account when you start trading which will not incur bank charges. As an accountant in practice I would not recommend this for two reasons - firstly your personal payments and non-business income are going to be mixed up with business transactions which leads to extra work in preparing your accounts.

Secondly if Her Majesty's Revenue & Customs undertake an enquiry into your business affairs they will want to know the source of all bankings into your personal account and if you cannot adequately explain them then they will want to include these amounts as your business income. Common problems are loans received from friends/family to finance the business venture or amounts you pay out (say for concert or sports tickets) for a group of friends who then pay you back by cheque.

So I always recommend any new business to open a business bank account. However once you become self-employed you have to keep proper records of your personal transactions, both income and expenditure, for at least six years because HMRC now have the power to look at your personal bank accounts. As indicated above they can ask about the source of money banked into your account and if your business isn't showing a profit they will wish to establish how you finance your personal expenditure. Therefore if you have good records of both personal income and expenditure you will be able to properly address any issues that they raise.

Since the big banks generally give 18 months free banking to new businesses, why not open a separate business account and organise your business finances properly from the start?

Fran

***Boardguide comment**

The previous sticky has been unstuck and can be found here:

Business Bank Accounts

emski1234

Hi all,
I have started up my own business (slowly but surely) and now need to set up a bank account. I have had a read around the boards, and have decided to simply open a new current personal account rather than a business one, as I am just a sole trader, and will simply be invoicing customers, there won't be any cash or cheque paying in etc, and I just don't think I need one, at least not at first.
My personal and joint current accounts are with Barclays, and I think it would be best to stick with them, at least then all my accounts will be linked and it will be easier to transfer funds etc. I will go into a branch and ask to open an extra account, but I'm just wondering what I should say. I imagine they'll ask what I need it for? I was planning on explaning honestly about my business, and I'm sure they'll try and sell me a business account, which I will turn down. Would it be easier to not mention my business? Will they refuse to let me have another current account if I refuse to have a business account? I'm just worried about what to say.
I know others have used current/personal accounts for their business, and I'm just wondering how they went about it?
Thank you!

Fran

emski,

If they ask you could say something vague like you want to organise your money in the future or that you want certain bills to be paid from one account.

MagicBurd29

My banking needs are simple, but I do have a lot of accounts (I'm self-employed, my wife was temporarily self-employed, I manage my ageing mother's savings, etc etc). I've therefore used a lot of institutions over the past ten years or more.

I strongly recommend everyone avoids the Cooperative Bank for business banking online. Just search online for moneybox, marc palmer, coop, online banking etc for a ton of feedback. Their online system is not fit for purpose. Five years ago it was OK; now it is completely broken. (smile's personal online system was OK five years ago; now it's exactly the same, preserved in aspic; but at least it still works).

How FSB can still recommend it is beyond me. I won't be renewing my FSB membership.

NatWest seem particularly competent (unless you object to card readers - I don't). Conversely I tried to open an RBS small business account a couple of years ago and gave up after 50 phone calls over 6 months.

I opened an A+L business account two years ago but imediately found their "security" processes far more cumbersome than I'd been led to believe so closed it. I had an Abbey business account for a year - they were competent but unpleasant.

HBOS' competency has been declining noticeably in the past year (from an already non-stellar level) in all areas, not just business online. So I've been moving away from them - business first, when they said they'd charge c.£200pa for about 5 transactions a month; then personal.

So I'm going to stick with smile for personal banking meantime; and give Coop business until March to convince me their new online service is imminent and competent (I have so few transactions I can cope meantime), failing which I might try HSBC.

Dexter794

Hello
I want to open a business account, is it ok to have it in my own name as i do a variety of things, plaster, tile, gardening and cleaning ovens. Would the HMRC be ok about this.
Cheers

Savvy_Sue

KatP wrote: »

What about Co-op how do you pay in with them?

We always used to pay in at the Post Office when we had a business account with the Coop. Of course that was in the good old days when there WAS a Post Office nearer than a bank ...

Savvy_Sue

Fran wrote: »

***Boardguide comment**

The previous sticky has been unstuck and can be found here:

Business Bank Accounts

and now locked ...

emski1234

Thanks earwig and fran for your advice. I applied online in the end, and fingers crossed in a few days I'll receive some paperwork. I chatted to an online help staff member to ensure I was getting the right account etc, no probs. Thanks again

helloguys

Hi!

I was recently made redundant and I am working freelance as a self employed basis. I may only be self employed for 3-6 months so ideally want to keep things simple and will just be invoicing 3-4 clients a month and recieving BACs payments. Like Emski I'm looking to open a current account to keep my finances separate. I currently bank with halifax so would like another Halifax current account do you think this would cause me any problems and with the name on the account and cards be the same? Just thinking if I end up with 2 identical debit cards I wont be able tell which is the personal one!

Considering my position do you think it is worth me looking at a business account?

Thanks in advance!