Small Business Bank Accounts Discussion Area

pennies_from_Heaven

Hi there,
I've been reading Martins article about not needing a business bank account if you have very few transactions, and opinions on here that everyone should have a seperate bank account for business, and I'm not sure what to do, so some help would be gratefully received!
I have been running a small craft based (making items) business from home since 2008, part time, which has slowlly but steadily grown.
I sell on ebay, etsy and have my own website which I can sell items on (rarely do however as I'm rubbish at updating it). Anyhow, I would say that 98% of my income is via paypal, so I have been using that as a sort of business account, paying for materials, fees etc out of it, then transferring my personal drawings into a savings account which is only really used for my business stuff, then into a current account. The occasional cheque I may get is paid into my current account, I sometimes use my credit card to pay for materials.
Overall very few transactions from my business go into/out of my current account. Do I need a business account in your opinion? Now my business is growing, albeit slowly, would that be the correct thing to do? My turnover at present is only about 12k, profit is about 9k. Help/comments gratefully received!

Harryo

Here are my thoughts:
1. There are no requirements that you must have a separate business account(s) so it really boils down to what is best for you.
2. Business accounts look more professional - if that matters to you and if customers / suppliers know your bank account details. If you have a Business Account then customers / suppliers will probably think your business is a proper business. If they get to know you trade with a personal account then they will probably assume the business is not big or that it is a side line.
3. Most business accounts charge quite considerable fees for paying in and paying out. I begrudge that myself. There are a couple that do not for small businesses, HSBC being one which I use. I use HSBC for main transactions and a Nationwide personal account for DD's and minor transactions.
4. I would say it is advantageous to have dedicated bank accounts (personal or business) for business use. It makes the accounts easier to handle as you do not have to separate business and personal items. Also if HM Revenue carry out an inspection it is easier for them to ascertain that you are keeping straight books (not that I support making their life easier!!). The running totals on statements are then also only related to the business activities, which makes keeping day to day tracking of the business easier.
5. Some banks have 5 days clearing - I would avoid them, it is nice to get your money quickly.
6. You may find that suppliers require refs if you set up accounts with them. In which case a Business Bank Account can be of benefit for this.
7. Credit cards are useful for getting free credit on materials, while you are waiting for payment (if used sensibly).
8. Most banks allocate a Business Manager. They can provide useful advice and also help you with financial matters such as projections, business plans, etc.
9. You can have any number of accounts for use in business. The more you have though the more time consuming are your Annual Accounts. If you do need to borrow money though make sure you either borrow on one of the accounts you use for business or make that account one of your business accounts to ensure you get tax relief on interest.

HarryO

Wywth

Harryo wrote: »

Here are my thoughts:
1. There are no requirements that you must have a separate business account(s) so it really boils down to what is best for you....

True, but most banks prohibit the use of a personal account (which is often free for day to day transactions) for business purposes.

If the bank discovers a personal acciount is being used for banking purposes, their typical action is to make it into a business account (which typically charges for everyday transactions - so that's all transactions whether business or personal being charged for)

lovinituk

Wywth wrote: »

True, but most banks prohibit the use of a personal account (which is often free for day to day transactions) for business purposes.

If the bank discovers a personal acciount is being used for banking purposes, their typical action is to make it into a business account (which typically charges for everyday transactions - so that's all transactions whether business or personal being charged for)

I took the risk and used a separate personal account when I started my business. I managed nearly 4 years! The only reason I changed was the business was incorporated so had to have a business account for the Ltd company.

If you're paying in cash and cheques regularly then it might arise suspicion but if most dealings are online there is little chance of being found out.

There are business accounts that don't charge for internet/online transactions. I have a Barclays business account which has no fees for these type of transactions. As an online retailer its perfect for me as I don't deal in cash or cheques. Its in the free banking period at the moment but even after that it will only be a small monthly fee as long as I don't pay in cash/cheques.

pennies_from_Heaven

Thanks everyone, I've decided that it is probably a sensible thing for me to have, i'll have a close look ino the different banks and their charges.
Thanks so much for your help guys

diz79

Ive moved this here as requested from somewhere else........

Hi guys,

Ive gone though the forum looking at different bits of info, but couldnt find an answer to this problem.

I have been a sole trader for 4 years using my own bank account, I now want to have a business bank account, am I allowed to have a start up account? Some of them seem to indicate you must be starting your business when you apply.

Also what are the best ones

From what I can see HSBC, Santendar and Barclays look the best.

I will mainly have BACS going through the account but will also have to pay in cash and cheques throughout the month HSBC definately charge a fee for this does anyone know of any that doesent?

Thanks in advance

pennies_from_Heaven

diz79 wrote: »

Ive moved this here as requested from somewhere else........

Hi guys,

Ive gone though the forum looking at different bits of info, but couldnt find an answer to this problem.

I have been a sole trader for 4 years using my own bank account, I now want to have a business bank account, am I allowed to have a start up account? Some of them seem to indicate you must be starting your business when you apply.

Also what are the best ones

From what I can see HSBC, Santendar and Barclays look the best.

I will mainly have BACS going through the account but will also have to pay in cash and cheques throughout the month HSBC definately charge a fee for this does anyone know of any that doesent?

Thanks in advance

I thought this might be the case when I opened mine with natWest - I have been a sole trader since 2008. I had a lettter from them a couple of weeks after opening the account saying as I was classed as 'new business' (to them I presume!) I was entitled to free banking for two years! Really pleased about that even though I had chosen an internet account with a flat fee of £5 a month with most transactions free, every bit saved helps!
So all in all its maybe worth asking?
HTH Pennies x

diz79

Wow thank you sorry for late response, think I have made up my mind

Agentdavid

Hi

Excuse my ignorance because i really haven't a clue about theses things but let me run this past you guys.

Im about to take over a martial arts class, teaching in the evenings. There is an existing student base and of these, 90% pay by standing order on a monthly basis. The other 10% pay cash or cheque. My only overhead is the hall bill which would be paid monthly and i could pay that in cash. So i don't really need a business account? I have an old savings account with the Co-operative which is still open and i use occasionally. Can i just use that account instead of opening a business account?

CKhalvashi

Agentdavid wrote: »

Hi

Excuse my ignorance because i really haven't a clue about theses things but let me run this past you guys.

Im about to take over a martial arts class, teaching in the evenings. There is an existing student base and of these, 90% pay by standing order on a monthly basis. The other 10% pay cash or cheque. My only overhead is the hall bill which would be paid monthly and i could pay that in cash. So i don't really need a business account? I have an old savings account with the Co-operative which is still open and i use occasionally. Can i just use that account instead of opening a business account?

You'll probably be in breach of the ts&cs, and therefore Coop could close the account.

HSBC offer the Business Direct account, which should be free in these circumstances.

CK