Business Start Up Accounts - Overdraft?

stuartbartley

Hi

I've recently set up a limited company selling physio equipment, rehab tools and general gym equipment. I've been operating for about a month and am going to sort out a bank account for the business rather than using my own personal one. The main point of my post is do you get an overdraft as standard? I have a few items that people are asking me when I'm going to stock it and at the moment I have to sell one line of items to get the profits to then add a 2nd and 3rd line etc. I'm not talking mega money - we're talking less than £1,000 on stock, so if I had an overdraft for around £2,000 I could get the 3 or 4 lines in now rather than having to wait until I get the capital from my other lines. Do business accounts get these sort of overdrafts as standard? I imagine there will be interest on it, but I would be able to pay the majority of the balance off pretty quickly, and I would imagine it would be cheaper and more flexible than a loan.

motorguy

stuartbartley wrote: »

Hi

I've recently set up a limited company selling physio equipment, rehab tools and general gym equipment. I've been operating for about a month and am going to sort out a bank account for the business rather than using my own personal one. The main point of my post is do you get an overdraft as standard? I have a few items that people are asking me when I'm going to stock it and at the moment I have to sell one line of items to get the profits to then add a 2nd and 3rd line etc. I'm not talking mega money - we're talking less than £1,000 on stock, so if I had an overdraft for around £2,000 I could get the 3 or 4 lines in now rather than having to wait until I get the capital from my other lines. Do business accounts get these sort of overdrafts as standard? I imagine there will be interest on it, but I would be able to pay the majority of the balance off pretty quickly, and I would imagine it would be cheaper and more flexible than a loan.

I would doubt you will get an overdraft.

Banks like to see accounts before they will consider it, particularly with a LTD company. Have you no cash of your own to put in? Or could you borrow it from a friend or relative? Interest free credit card of your own you could use?

gb12345

stuartbartley wrote: »

I've recently set up a limited company selling physio equipment, rehab tools and general gym equipment. I've been operating for about a month and am going to sort out a bank account for the business rather than using my own personal one.

I'd get that account sorted PDQ if I was you - you shouldn't be using your personal account for a limited company. The taxman could decide that any money you have received in the account is personal income and tax you on it accordingly.

Did your accountant not advise you on the legalities of Ltd companies when you set it up?

Mistral001

gb12345 wrote: »

Did your accountant not advise you on the legalities of Ltd companies when you set it up?

Agree, also did they not expalin the meaning of Ltd. It means that any crediitor, such as a supplier or bank could lose all the money your company owes them if it runs into financial problems. look at it from the bank's point of view and you might get your answer.

Wywth

stuartbartley wrote: »

Hi

I've recently set up a limited company selling physio equipment, rehab tools and general gym equipment. I've been operating for about a month and am going to sort out a bank account for the business rather than using my own personal one. The main point of my post is do you get an overdraft as standard? I have a few items that people are asking me when I'm going to stock it and at the moment I have to sell one line of items to get the profits to then add a 2nd and 3rd line etc. I'm not talking mega money - we're talking less than £1,000 on stock, so if I had an overdraft for around £2,000 I could get the 3 or 4 lines in now rather than having to wait until I get the capital from my other lines. Do business accounts get these sort of overdrafts as standard? I imagine there will be interest on it, but I would be able to pay the majority of the balance off pretty quickly, and I would imagine it would be cheaper and more flexible than a loan.

Howe can you be using a personal account to accept payment to a limited company (unless you are only dealing in cash)?

You may be able to obtain an overdraft on your personal account, subject to status (and then make a loan to the company)

gb12345

Wywth wrote: »

Howe can you be using a personal account to accept payment to a limited company (unless you are only dealing in cash)?

Depends on how on the ball the bank are at checking payee details against account name.

There was a thread on here recently about a IT contractor who had been receiving his Ltd company payments from his agency in to his personal account and then suddenly the bank rejected one.

Wywth

gb12345 wrote: »

Depends on how on the ball the bank are at checking payee details against account name.

There was a thread on here recently about a IT contractor who had been receiving his Ltd company payments from his agency in to his personal account and then suddenly the bank rejected one.

It's quite common for IT contrcators and the like to set a a limited company using their own name.

Whilst an inattentive bank teller may allow the odd cheque payable to stuartbartley ltd to be paid into a bank account of stuartbartley, it's unlikely to go on forever unchallenged.

However, the chances of getting a cheque made payable to say tThe ACME physio equipment, rehab tools and general gym equipment company ltd being paid successfully into a bank account in the name of stuartbartley is remote, to say the least.

If the OP has given their personal bank account details for the purposes of receiving funds from clients by direct bank transfer, etc, then it could be considered the OP is personally supplying those goods or services and so may not be able to benefit from the limited liability a company could provide.

stuartbartley

Hi all thanks for your replies. I've sorted the account with the bank. In answer to a few of the questions - i chose to set up as an ltd as I wanted to pay myself dividends (and possibly a salary depending on profits/turnover etc). I thought setting up as an ltd would be more appropriate than setting up as a sole trader. I've only received a few payments in cheque form addressed personally, majority of the things i've sold has been on ebay. I explained all this to the bank manager after I read a lot of these comments (and was very worried I was committing some kind of fraud) but she was ok and said as long as I can explain to the tax man should he come asking it would be ok.

stuartbartley

another reason I set up as a ltd was due to the fact that the companies I deal with send pro-forma invoices, so there wouldn't really be any liabilities to any creditors as I wouldn't have any. Max I think I can get is maybe a credit card, but I've been told by the bank that even though im an ltd the credit card application would be done on my credit rating.