Business Bank Account with Bad Credit - Got Refused - Is this Now an Option?

jonnyfiasco

Hi

Just got refused by Natwest for a business bank account (poor credit on my part). No use me whinging about it, but I wondered is if this is a possible solution.

1. Transfer the 1 share to my father (great credit) which now means he owns 100% of the company.
2. Appoint him as a director
3. Resign as a director.
4. Apply for a bank account and just put myself as a signatory

Is this a possible solution - I see no reason why it wouldnt be. Obviously I wouldnt want him to be affected, just wondering any others thoughts on this?

Thanks

Horace

Who do you bank with privately? Ask them for a business account. Try a different bank.

All the faffing around with directors seems a bit bonkers to me. Have you set up as a limited company or are you still a sole trader?

Annisele

Once you make your father the sole shareholder and director, how are you going to take money out of the company?

Generally it's more tax efficient to take money out as dividends than as salary - but with your scheme, dividends would be your father's income and not yours.

jonnyfiasco

Horace

Yes indeed it is a limited company rather than a sole trader for several reasons which I am not going to get into, but limited company is the only option.

The fact is Natwest refused me, and they offer a Foundation account (suitable for those with poor credit) - I didnt get one through them, and reading through many similar threads it looks like there aint no chance I'm gonna get a bank account elsewhere. To circumvent this, that was the whole idea about changing directors. I dont think it is bonkers if I cannot get a bank account for the company and cannot deposit cheques paid to me.

Annisele - that is a very good point, one I had not thought about, as yes I had intended to get paid via mainly dividends, however there is no reason that once the bank account is setup I "purchase" a share in the business?

Horace

Like I said before, try other banks - Natwest may have refused you but another bank may not. You won't know until you try.

bengalknights

Have you tried barclays and santander as both of them generally give business bank accounts to newly formed companies although they wont give any credit or overdraft facilitys.

Annisele

jonnyfiasco wrote: »

Annisele - that is a very good point, one I had not thought about, as yes I had intended to get paid via mainly dividends, however there is no reason that once the bank account is setup I "purchase" a share in the business?

I think that, from a tax perspective, you might be opening up a wholly unnecessary can of worms.

Why are you wanting to transfer a share to your father in the first place? I can (sort of) see why you're thinking about making him a director, but why shareholder too?

Does your father understand the responsibilities he'd have as a director, and is he happy to take them on?

If NatWest's problem is your involvement, then you'd still (in effect) be a shadow director even if you did appoint your father - so I can't see that appointing him would help.

I agree with Horace (edit: and bengalknights), you should try other banks. I know you say that they won't accept you, but it seems to me that "hassle of finding out that other banks really won't accept me" is infinitely smaller than "hassle caused by my transfer of shareholding scheme" - so you should try one before you go for the other.