New sole trader, please help.

thedokta

Hi, I've recently set up my own image library, selling the rights for contemporary photography to newspapers, magazines, etc. I remember somewhere being told that a bank charges for business transactions. I'm wondering whether as a sole trader I can use my current account (in my name) to take business payments and therefore miss these charges. Or can I set up a business account (in the business name) and then when it comes to making payments to photographers, pay a lump sum to my own account and then pay the photographers from there, otherwise I will be making a number of payments each month.
I hope someone might be able to help?
Also, as a sole trader, should I pay myself a salary? Initially I may not be able to but should I try to give myself a set salary for the year?
Thanks
Kieran

Tallymanjohn

As a sole trader you don't have to set up a separate account but the advantage of it is that you can do it in your company name and cheques can be made payable to that, rather than everything to your own name - easier to keep track of & easier to convince the taxman, should you need to, that you're operating above board. A bit of asking around should be able to find you a business account with low or no initial charges - the Co-op gave me 2 years free banking as long as I kept a minimum £1000 balance for the duration. Now the charges aren't too bad, though I don't write out many cheques & never use the debit card & they don't charge for electronic payments - works out to about £6 a month which is tax deductable. As far as paying yourself a salary it's totally up to you. As a sole trader you can handle the money as you want as long as you set aside the taxman's cut & pay your basic NI. I'm assuming you have registered as SE with the taxman? - if not do it asap else you will face a fine. You may also want to see if your local tax office runs a seminar for new businesses - they can be very informative as far as telling you the best way to keep records (I just use a spreadsheet) & what you can claim for in the way of tax allowances.

UKMale

Many years ago I also faced this question and was advised by my bank to open a no.2 personal current account;this always worked for me ! Good luck

thedokta

So, just another bank account in my name? How does that work? I just pay business stuff in to that account? Do you think an account can be set up in the my name but accept cheques written out to the company name?
Sorry for all the questions!

Toni_Tax

Hi, newbie here!

As a sole trader you will be taxed on the profit (gross income less allowable expenditure) that the business makes, therefore your 'salary' is irrelevant for tax purposes.

Here is the Revenue' self-employed helpline number 08459 15 45 15. You need to register within three months of the business start date otherwise you can be liable to a penalty of £100, although in my experience the Revenue rarely pursue this.

You can go to the Revenue's website and under forms and leaflets search for a leaflet named 'thinking of working for yourself?'.

As for banks charges, this is not my area, but I would have thought that your Bank will not allow you to use your current account (if they catch you!). I would recommend looking around for the best business rates.

hope that helps
Toni

thedokta

Surely as a sole trader though I wouldn't be breaking any laws as the company isn't a registered company anyway.