Do I need a business account?

JustagirlinCornwall

After having set up my own Photography and Artography business last year I have been occasionally taken payment via the internet, I sell on ebay from time to time and soon setting up on etsy, I use paypal for payments but I would say so far 90% of my trade is local and cash customers, my bank Lloyds have advised I open a business account with them but I don't feel I need one, after telling them this they said I am not allowed to run business payments through a personal account . Can anyone tell me if this is correct, atm I am expecting maybe 1/2 payments a month through paypal.

Thanks for reading

InsideInsurance

Are you acting as a sole trader or a limited company?

If you are a sole trader then legally there is no requirement for separate accounts however contractually most banks to specify that personal accounts must not be used for business banking. If they continue to believe you are using your personal account for business activities they may close your account.

If you are operating a ltd company then you cannot put the companies money into your account because it is the companies money not yours (as a sole trader there is no "company" so it is all yours)

JustagirlinCornwall

InsideInsurance wrote: »

Are you acting as a sole trader or a limited company?

If you are a sole trader then legally there is no requirement for separate accounts however contractually most banks to specify that personal accounts must not be used for business banking. If they continue to believe you are using your personal account for business activities they may close your account.

If you are operating a ltd company then you cannot put the companies money into your account because it is the companies money not yours (as a sole trader there is no "company" so it is all yours)

Thanks for your reply, I am just a sole trader, I did not realise about them closing my account thanks for the warning, I think to be on the safe side, I may make an appointment with the manager and see what they say, as I am hoping this will expand later on with a bigger online shop

InsideInsurance

Given you are a cash business you're not going to benefit from the normal recommendation of going with HSBC's Direct account. More likely you will go for the introductory free offer for a year or two and then remember to switch accounts before it expires. The only benefit of the business account to you is being able to accept cheques made out in your trading name.

The benefit to them is banks charge for almost everything they do (eg paying cash in is normally around 0.6% fee)

JustagirlinCornwall

InsideInsurance wrote: »

Given you are a cash business you're not going to benefit from the normal recommendation of going with HSBC's Direct account. More likely you will go for the introductory free offer for a year or two and then remember to switch accounts before it expires. The only benefit of the business account to you is being able to accept cheques made out in your trading name.

The benefit to them is banks charge for almost everything they do (eg paying cash in is normally around 0.6% fee)

Thanks so much for your help just to be on the safe side, I will go with the free offers there is one at my back atm and just switch accounts before the free banking is up