Sole trader, please help

docij

I'm a sole trader and have an ordinary account plus a savings account both with the same bank and both of which I use solely for my business.

Every payment received goes into the ordinary account and then I transfer a third into the savings account for my tax and VAT payments.

I don't have a trading name so it's easier, and cheaper, for me to do it this way. I think tru is right that the Abbey do free business accounts.

Have you registered for flat rate VAT? It has some advantages if you aren't earning enough to pay ordinary VAT. Check with your accountant.

richt71

thedokta wrote:

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

Keiran,
Set up a second personal account but I'd advise strongly not to mix personal account with business payments. One of my mates did this as he works for himself and got into all sorts of issues with inland revenue. They said he was avoiding tax and he had to produce 12 months of statements and unless he could account for all cheque payments into his personal account they classed it as income. He settled but got fined.

aeuerby

Yep Abbey do free life time accounts but limit how many transactions a moth you make although we haven't hit any of them yet and are constantly paying money in and taking out!

You can't pay money in over the counters with it though you can only use bank transfer or the machines.

Anyway here is the link it tells you about the umber of free transactions you can have.

http://www.anbusiness.com/services/charges_interest.shtml

By the way my hubby is a sole trader and has the business name on the account. Much more professional!

Glad

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Kilty_2

I'm running a business as a sole trader and using a 2nd personal bank account to do so, although I've no choice since no bank will give me a business account because of my age.

Not had to complete a tax return yet as I'm in my first year of trading but as long as you keep personal and business seperate and keep records of everything, you'll be fine. Alternatively, if you are eligible for a business account, go with Abbey since they provide free business banking with some restrictions.

Debt_Free_Chick

thedokta wrote:

I am wondering whether I am allowed to make one large payment to my personal bank account at the end of the month and then from that divide up the money to be paid to the photographers rather than incur the costs of paying individual cheques from the business account or whether I can set up another 'personal account' which can accept cheques made out to the company name for people paying me?

No reason why you can't do this, but two things.

Firstly, your bank might insist that you put the business transactions through the business account.

Even if they don't, you need to have very thorough bookeeping records. All the business transactions should be readily available so you can draw up the accounts. Having those transactions in a separate account can help with this. If you don't put them through a separate account, then make sure you keep proper books for the records - meaning that business transactions which go through your personal account must still be recorded in the business's books.

jennivallins

I've read all this thread, but am still a little confused:

1) Is there anythihng in banks Terms &Conditions about not using a Personal Bank Account if you are self-employed?
2) If I go in to my bank and ask to have a second current account so my work money is seperate, will they get cross?

Hope that makes sense!

buglawton

Nope you can use your personal account. BUT is may sound less professional when you ask people ot write checks to A. Bloggs instead of say to IMAGECO. And you keep your finances clearer and easier to track come Tax Form time. I suspect most banks won't allow a 2nd ordinary current account in the same person's name.

nemofish

Hi
This thread has been very helpful . I think it is best to keep personal and business seperate. (My lowly opinion) I am busy now doing my books for my business which I closed on 01.04.2006 and have to have the tax done by 31.01.07. (Heaven help me) I have a question . I paid for a lot of things from my own personal and credit card accounts. Can I put through an Invoice to the business as I drew money from the business account when I had funds in there to cover these expenses. That way I have a drawing and an invoice to match it. I have all the receipts and invoices relating to these expenses. Not very good at book keeping ( obviously ) any help much appreciated.

Debt_Free_Chick

nemofish wrote:

Hi
I paid for a lot of things from my own personal and credit card accounts. Can I put through an Invoice to the business as I drew money from the business account when I had funds in there to cover these expenses. That way I have a drawing and an invoice to match it. I have all the receipts and invoices relating to these expenses. Not very good at book keeping ( obviously ) any help much appreciated.

Yes, that's fine. In the business account, you should show each item under the relevant heading e.g. if you bought stationery, then show the expense under "Stationery".

If you're using double-entry bookeeping, you can simply debit Drawings & credit "expense nominal ledger" to avoid transferring any money around. "Expense nominal ledger" means the nom ledger for each expense item.

HTH