Small Business Bank Accounts Discussion Area

sarahs999

Hello all

Hoping someone can help me. My sister in law and I have just set up our own business. It's craft and catering based, very small scale indeed, and we are operating as a partnership.

We are trying to work out what our bank account options are. We need an account simply to put some starter money in, which we will then use to pay bills and buy supplies etc, and to receive online payments and occasionally cheques. We don't need a cheque book, but online banking is important.

We can't pay in regular amounts and we are so small scale I'm not keen on paying fees. Is there anything we can use? I was thinking of using a simple personal savings account that doesn't charge for instant access, but am wondering if that is not allowed for businesses.

I'm sure this has been answered before, and I have briefly read the guide but would really appreciate any pearls of wisdom.

Thanks so much

mf78

You can use a simple personal current account for that, as long as you have it in one of your names rather than the business name. Theres no legal requirement to have a business account just for being in business (though that may differ if you become a ltd company, I'm not sure). The bank however, may ask that you change to a business account (so they can charge you) if they notice a lot of transactions/cheques/cash going through the account. But you don't have to and can always just move.

I just used a personal current account for years when I started.

Savvy_Sue

sarahs999 wrote: »

Hoping someone can help me. My sister in law and I have just set up our own business. It's craft and catering based, very small scale indeed, and we are operating as a partnership.

We are trying to work out what our bank account options are. We need an account simply to put some starter money in, which we will then use to pay bills and buy supplies etc, and to receive online payments and occasionally cheques. We don't need a cheque book, but online banking is important.

We can't pay in regular amounts and we are so small scale I'm not keen on paying fees. Is there anything we can use? I was thinking of using a simple personal savings account that doesn't charge for instant access, but am wondering if that is not allowed for businesses.

mf78 wrote: »

You can use a simple personal current account for that, as long as you have it in one of your names rather than the business name. Theres no legal requirement to have a business account just for being in business (though that may differ if you become a ltd company, I'm not sure). The bank however, may ask that you change to a business account (so they can charge you) if they notice a lot of transactions/cheques/cash going through the account. But you don't have to and can always just move.

I just used a personal current account for years when I started.

The issue of using a personal account in one person's name is that it won't 'belong' to the partnership, it will 'belong' to whoever's name it is in.

That's apart from the issue that it will almost certainly be against the terms and conditions of the account to use it for business.

do you have a partnership agreement?

Debras_Angel

Anyone used CashPlus as an alternative?, they charge £49 annual fee and it looks easy enough.

Mumaj

But.. I'm in the process of setting up a business bank account with natwest and am waiting for stuff in the post etc.

However, I have just started the business this week, photography, and I need to buy a lens and a backdrop.

I need them ASAP and have the money from them in my account but I want them to go on my tax return/self assessment as expenses. Can this be done from my personal account it should be just this once as onus the business accounts set up there will be money in there for such things. Help?

Savvy_Sue

Yes, you can do this from your own account and repay yourself from the business account when it has funds in it. Keep a paper trail ...

Mumaj

Fab thank you. Xx

tracylouiseg

• I know you probably get hundreds of messages but I'm hoping you can help. I read on your site that if you're a sole trader then you don't need a business account, you can use a personal bank account for your business. I was never told this when I opened my business account (I'm a driving instructor, only me and not a Limited company) so I have been paying approximately £25 a month to Lloyds for 7 years. Can I make a complaint about this? And possibly get my money back??
  
  
  
• Also I'm trying to switch accounts from a business to a personal account (due to this recent information I've just come across) and the bank didn't know that either (sole trader/use personal account) I'm in the process of trying to switch accounts but the Halifax doesn't think it'll let them do it in the 7 day switch, as they've never come across this before! Therefore I would lose the £100 bonus if it can't happen using this 7 day switch and I would have to do the direct debits myself?? Please help!!! Much thanks
  
  
  
  
  
  
  

Savvy_Sue

Personally, I think you need to read the terms and conditions on your various bank accounts. It's true that if you run a ltd co then you MUST have a business account rather than a personal one, whereas there is no legal requirement to run a business account if you're a sole trader, BUT if you read the t&c of any personal a/c they usually say that it can't be used for business.

So question 1: since many people choose to open a business account even if they are just a sole trader, I don't think the bank was under any obligation to say "hey, you don't need a biz a/c, you can just use a personal one instead." So no grounds for complaint / refund either.

Question 2, again I expect that the 7 day switch thing applies to personal accounts rather than biz / biz to personal. So: I'd expect to have to do the DDs manually, and I wouldn't expect to be entitled to the £100, and I'd read the t&c carefully.

You could check with Halifax whether they are happy for you to use this account for your self employed activities before you go any further. The risk if you don't is that they realise it should be a biz a/c, and backdate biz charges to the date of opening.

I'm sure a few people will come along and say there's no risk. You're the one who needs to make the decision, however, and you're the one who needs to read the t&c.

lovinituk

tracylouiseg wrote: »

• I know you probably get hundreds of messages but I'm hoping you can help. I read on your site that if you're a sole trader then you don't need a business account, you can use a personal bank account for your business. I was never told this when I opened my business account (I'm a driving instructor, only me and not a Limited company) so I have been paying approximately £25 a month to Lloyds for 7 years. Can I make a complaint about this? And possibly get my money back??
  
  
  
• Also I'm trying to switch accounts from a business to a personal account (due to this recent information I've just come across) and the bank didn't know that either (sole trader/use personal account) I'm in the process of trying to switch accounts but the Halifax doesn't think it'll let them do it in the 7 day switch, as they've never come across this before! Therefore I would lose the £100 bonus if it can't happen using this 7 day switch and I would have to do the direct debits myself?? Please help!!! Much thanks
  
  
  
  
  
  
  

You've misunderstood (or the person who gave you the information has). A sole trader is still a business and as such banks can require you to use a business account. Many sole traders do use personal accounts (I did for a while) but it is against the terms of the account and if found out the banks can close your account. They are not required to allow you to use a personal account for business at all.