Sole trader start up. Help needed.

ITtim

I may be on the wrong board here so hopefully a mod can move it if incorrect.

Ok, recently i registered as self employed with HMRC as a low earning sole trader.

I've set up a little web site building company for small businesses etc so that I can earn a few bob when sat at home in the evenings. (basically to supplement my main employed income)

First Question,

Do i need a business account? or can i use a current account (remember the amount of money i make will be pretty low)

If I do need a business account whats the best option for running one online?

and finnaly, how do I pay myself? Ideally i'd just like to withdraw any earnings and put them in a savings account. (or spend it) can I do this easily?

I'd really appreciate any help!

cannyscot_2

Better to keep the money seperate. HSBC and a few others have free online business banking usually for 12 or 18months for a start up. (Just be aware of charges after free period usually some catch ie deposit 1K a month etc)

You can pay yourself every penny out of the account if you wish as long as you bear in mind that you will have to pay tax on the income next year . If you have another job ? and are higher rate that will be 40% tax.

ITtim

Thanks cannyscot, am i allowed to set up a new current account and pay my earnings into that? or as a registered business do i have to have a business acccount?

I assume that once money is paid in I can withdraw it to use as I wish? i guess the bank statement would show IR that i've paid myself?

magpiecottage

Abbey (or rather Santander) offer free business banking for ever.

It has restrictions which mean it might not be useful if you carry stock but otherwise it may well fit your needs.

Consider whether to trade as a limited company. It is a little bit of extra work but means you are not personally liable for debts of the business (unless you give a personal guarantee) and can also save you tax/National Insurance.

ITtim

i'm hoping to keep this as simple as possible, i don't want it to take up too much of my time. I may only earn 1k a year. (more would be nice!) There should be no reason why the business would obtain debt. My regular outgoings are £4.70 a month!

I'll check out the Santander account though, I have no stock as primarily i offer a service.

ITtim

Right, having looked at some of the 'free' business accounts it seems to me that I wouldn't be putting in enough money to keep it charge free.

in that case could i use a normal current account? or could i charge any cost of the business banking as a business cost? :think:

fengirl_2

It does not matter whether the account is called a business account or not, its just better to keep the money separate. Yes, bank charges are allowable against your income.

ITtim

i fully intend to keep it seperate, but would want to take money out as i please.

I ask mainly because i went to Nationwides website to apply for a current account and noticed it said 'not to be used for business'

however it seems that the business accounts are far more complicated than i really need.

RoxyK

I'm S/E as is my DH and we only have one main bank account each which we use for everything. As long as you keep good accurate up to date records that is all you need. You could even just transfer your earnings into a savings account if you wanted. HTH

ITtim

Thanks Roxy,

I'm happy to have a seperate account, i'm useless with anything involving maths so keeping it all appart suits me. I think i'll just find a current account in that case.

PlutoinCapricorn

I am self employed, and I use my one, personal bank account for everything. I highlight SE income on my statements in case I am ever investigated: the amounts match my invoices and my outgoings are low and most are covered by home running cost payments, which would be made anyway. My statement probably looks much the same as it would if I were an employee.

However, it is the low volume of transactions and amounts and the nature of my work that makes this possible. I am not really running a business as such. If I were buying and selling, it would be a different matter and the bank might notice something and put a stop to it.

I agree that incorporating just for the sake of a few thousand per year does seem like overkill. Have you investigated www.businesslink.gov.uk?