Business Bank Account for Ltd company

robjohnson1979

Hello, can anyone help me...I have set up as a limited company for a contract job i have taken. I now need to set up a buisness account by law, but my credit rating is 'fair' in the 700's due to 2 late payments to a catologue at the end of 2010. i do not require any credit as i am not buying anything, just an account to pay my wages into. I have been advised my my bank when I went to open an account that I could be declined, so decided to wait to see if I could look into this further. thanks

fuse

you do not need an account by law for a business - its a lie often peddled by banks. To make life/accounting easier it may be better to open a second personal account.

1984ReturnsForReal_2

fuse wrote: »

you do not need an account by law for a business - its a lie often peddled by banks. To make life/accounting easier it may be better to open a second personal account.

You invoice in the limited company name & payment comes back in that companies name,

Also the limited company is not you. It is a completely separate entity.

The clue is in the OP "limited company"

robjohnson1979

Thanks for the reply, that is very interesting. What are thge benefits of having a business bank account if this is the case? A lot of business B/A offer free deposit/withdrawls but some you have to pay so in this case, so long as the business only includes one person (like in my case) this would more than sufficient.

I thought that it was something to do with companies house and for tax purposes? I'm new to all this and quite frankly clueless!

Any responses are welcome...

MrRedundant

If you are running a business as a Ltd company you should have an account in that name. Whilst it may not be a legal requirement your asking for trouble by not doing it.

Would you pay money to an employee of a company directly rather than into their own accounts?
What if it goes wrong? How would an insolvency practitioner separate you from the company?

robjohnson1979

1984ReturnsForReal wrote: »

You invoice in the limited company name & payment comes back in that companies name,

Also the limited company is not you. It is a completely separate entity.

The clue is in the OP "limited company"

I thought there was more to it! Do you know of any business bank accounts that either are more 'lenient' and offer accounts to people with 'fair' credit scores (this is so annoying by the way as it was literally 2 late payments of £50! due to us having a baby and not being on the ball with it!) or even no credit checks at all?

The way my business will work is simply that I am offering my services and will be getting and submitting a weekly timesheet for the hours worked, I will then get paid for the hours ive done. I dont need an overdraft or access to any credit as I wont be buying any materials or paying any bills from this account. It will just be a holding account for the money before i withdraw it as my wages.

MrRedundant

As it is a Ltd company your credit shouldn't be too much of an issue unless they are asking you to underwrite the facillities as they couldnt come after you anyway?

Business banking will cost money for most services. Its how they make money. Some may offer free to smaller business or lower activity business.

What your suggesting really doesnt sound like a business though; sounds like your self employed at best if not employed and I doubt its worth the hassle of setting up a ltd company etc.

Why can't you just be paid on the books?

robjohnson1979

I agree with you, its just the way the company in question operate. They are a very large blue chip company and wont deal with sole traders. They have a mix of permanent and 'contract' staff, the contract staff are there to cover short term contracts. It is like working as a consultant (project management) and moving from one contract to the next, the point in being 'ltd' is that the comany can claim its expenses and offset them against the tax bill, i.e. travel, stationary, computer software/hardware etc, etc.

The only other option would have been to operate under an 'umbrella company' which provide your services to the company and then get paid, they then pay you as an employee of themselves (PAYE) but obviously this means taking less (a lot less) of your contract home which is no good when you need to think about setting monies aside for the future i.e. pensions etc.

I hope this is clear....All I need is a business bank account so that the ltd. company has somewhere to trade, I am just a bit scared to apply for a business bank account and get refused, further impacting on my credit score....Its a right bummer!

fuse

As i said previously there is no legal obligation to have a business account, which is true. The only legal obligation is to show a clear distinction between personal and company expenditure for tax puropses - which is much easier with separate accounts. The benefit to the bank is they charge you for everything that you get for free in a persoanal account. This is however off the topic.

You shouldnt have any problems opening a business account, especially one without any credit/overdraft facilities. I spoke to my branch manager for about an hour and had my account opened a few days later, all he wanted to see was clear business plan etc (different scenario to yours) but i had been a personal customer there for 30 odd years before hand.