Small Business Bank Accounts Discussion Area

tracylouiseg

lovinituk wrote: »

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.

Money Saving Expert gave me the information, it states....

"Best business bank accounts

Personal bank accounts are usually fees-free if you're in-credit, yet the opposite's true for their business brothers. Charges of £25 per transaction are possible on top of monthly account fees, and this can be a nightmare. There are four steps towards beating these.

Step 1: Use a personal account if you can
If you are a sole trader (not a limited company), then you can simply use your normal bank account for your business, with all the better terms that involves.However, using a separate, dedicated account could make your record-keeping a lot easier. It could also be a huge help if HMRC selects your tax return for an in-depth enquiry."

http://www.moneysavingexpert.com/banking/small-business

lovinituk

tracylouiseg wrote: »

Money Saving Expert gave me the information, it states....

"Best business bank accounts

Personal bank accounts are usually fees-free if you're in-credit, yet the opposite's true for their business brothers. Charges of £25 per transaction are possible on top of monthly account fees, and this can be a nightmare. There are four steps towards beating these.

Step 1: Use a personal account if you can
If you are a sole trader (not a limited company), then you can simply use your normal bank account for your business, with all the better terms that involves.However, using a separate, dedicated account could make your record-keeping a lot easier. It could also be a huge help if HMRC selects your tax return for an in-depth enquiry."

http://www.moneysavingexpert.com/banking/small-business

The important bit is where it says "Use a personal account if you can". It doesn't say anywhere in that article that it is your right. As I said before, banks are not required to allow you to use a personal account for business purposes at all.

Savvy_Sue

lovinituk wrote: »

The important bit is where it says "Use a personal account if you can". It doesn't say anywhere in that article that it is your right. As I said before, banks are not required to allow you to use a personal account for business purposes at all.

I suspect as well that if you just start using a personal account when you start up, the bank won't notice, and probably won't care until there's a lot of 'stuff' going through it.

So if you go in and say "I want to open a new bank account" and they ask no questions there's no reason they won't offer a personal account.

However, if you go in and say "I'm starting a business and I need a new bank account", they will - quite reasonably - offer you a business account.

Likewise if you go in and say "I'm running a business and I want to move my account to your bank" they will - again quite reasonably - offer a biz a/c.

Expecting them to transfer an existing biz a/c to a personal one under any 7 day guarantees or special offers seems unlikely and is definitely not something they are required to offer.

lovinituk

Savvy_Sue wrote: »

I suspect as well that if you just start using a personal account when you start up, the bank won't notice, and probably won't care until there's a lot of 'stuff' going through it.

So if you go in and say "I want to open a new bank account" and they ask no questions there's no reason they won't offer a personal account.

I used a personal account for a couple a years when I was a sole trader. I just took the chance that they wouldn't notice and they didn't. When the business was incorporated we didn't have much choice then!

Savvy_Sue wrote: »

However, if you go in and say "I'm starting a business and I need a new bank account", they will - quite reasonably - offer you a business account.

Likewise if you go in and say "I'm running a business and I want to move my account to your bank" they will - again quite reasonably - offer a biz a/c.

Expecting them to transfer an existing biz a/c to a personal one under any 7 day guarantees or special offers seems unlikely and is definitely not something they are required to offer.

Exactly.

stardust09

I suppose my question is how might the bank find out that you're using a current account for business unless you have a significant volume of account activity? I am a sole trader working in a complementary health field, with about five suppliers paying me (but they only pay when all the treatment is complete so I get large sums of between £400-£1000 infrequently). I have two direct debits leaving my account each month and about 2-4 payments in by BACS per week. I have the occasional expense but nothing regular. I have an annual turnover of about £25,000.

I am hoping to conceal this in a current account but am also scared of being found out! However, my main personal current account has more activity on it than my business account...

Harryo

I really would not worry about it.

I have been using a personal account for the majority of my business purposes for 36 years, to reduce bank charges to a minimum.

I have a trading name and therefore have an account (Account No. 1) in that name for the majority of payments in and then I transfer the money into a personal account (Account No. 2), with another bank, from where I make all my payments out. These are primarily DD's or electronic transfers to suppliers, staff, VAT, tax, etc. Any payments in my own name go into account No. 2.

I cannot imagine banks would be really interested in checking accounts for business use or would be able to ascertain if an amount was purely for business, unless you divulged the information to them. The banks, insurance companies, Government, Customs and Excise, etc screw businesses. Give them payback when you can.

What in any event would be the worst scenario if they did? A change of banks?

Savvy_Sue

Harryo wrote: »

What in any event would be the worst scenario if they did? A change of banks?

a little more expensive / time consuming than that, they may charge for business use and backdate this.

Atidi

stardust09 wrote: »

I suppose my question is how might the bank find out that you're using a current account for business unless you have a significant volume of account activity? I am a sole trader working in a complementary health field, with about five suppliers paying me (but they only pay when all the treatment is complete so I get large sums of between £400-£1000 infrequently). I have two direct debits leaving my account each month and about 2-4 payments in by BACS per week. I have the occasional expense but nothing regular. I have an annual turnover of about £25,000.

I am hoping to conceal this in a current account but am also scared of being found out! However, my main personal current account has more activity on it than my business account...

I've no idea.

It's not as though the bank can see all the activity in the account, those you pay, those who pay you, the frequency of these transactions, etc.

Oh hang on a minute ... :cool:

Atidi

Harryo wrote: »

I really would not worry about it.

I have been using a personal account for the majority of my business purposes for 36 years, to reduce bank charges to a minimum.

I have a trading name and therefore have an account (Account No. 1) in that name for the majority of payments in and then I transfer the money into a personal account (Account No. 2), with another bank, from where I make all my payments out. These are primarily DD's or electronic transfers to suppliers, staff, VAT, tax, etc. Any payments in my own name go into account No. 2.

I cannot imagine banks would be really interested in checking accounts for business use or would be able to ascertain if an amount was purely for business, unless you divulged the information to them. The banks, insurance companies, Government, Customs and Excise, etc screw businesses. Give them payback when you can.

What in any event would be the worst scenario if they did? A change of banks?

You may not imagine it, but the amount of business users who find all their personal banking suddenly being charged at the business tariff rates too when the bank finds out is quite staggering.

Still, ignorance is bliss .... so they say :cool:

PlutoinCapricorn

I am a sole trader; I am a consultant/researcher who trades under my own name; I have always used my one personal bank account for everything.

I do not really see myself as operating a business as such: I just get paid gross not net for my time. My bank account looks much the same as it would if I were on PAYE, maybe with two jobs.

It seems to me that people such as me are in no danger of being asked to open a business account: I do not frequently pay in large amounts of cash, there are only a few transactions each month and only small sums of money are involved.

There are people who obviously need a business account, and there are some borderline cases: perhaps the OP is one of these.

Perhaps it is partly what you are doing and partly how much money is involved. I would expect people who buy and sell things to be treated as a real business.