Using personal bank account for Ltd company?!

kwhybro

OK, I already know that any accountants in the room are going to throw things at me but...

I started my Ltd company a year ago and, due to many different reasons, have never actually used a business account. I realise this can cause a huge headache when it comes to accounts but I do pay a monthly subscription to accounting software (Kashflow) so everything is really clear on there in terms of what I spend from the business. However, I know this makes it really hard to ascertain what I've taken out of the business.

I've looked at Coop for a Ltd business account but it's so darn complicated & they're asking for a business plan now which I've never written!

Is is completely necessary for me open one?

Thanks in advance!

Suarez

You and the company are 2 separate entities. You cannot have a personal account and run your business through it. Customers will expect to pay the company.


There can be huge implications with money laundering, tax inspections etc.

Robin9

You must make it your New Years resolution to open a business account and sit down and develop your business plan

phill99

You don't need a business plan to open most busness accounts. I have been in business for 13 years and have never had a business plan, and never been asked for ne when opening a busness account.

Savvy_Sue

At this stage a business plan doesn't have to be hugely complicated, but it's probably worth doing.

If only because it gives you something to aim for and to measure your success against.

One person might know it will take several years to see a decent profit in a new business, another might believe they can do extremely well from day one. But if there's no plan, how do they know whether they're doing as well as expected, or not? And if there's no plan, and it's not nearly as profitable as expected, how do you work out why, or what you can do to improve things, or even if it's ever going to work out?

You've got a year's worth of running behind you, so look at those figures. Is next year going to be better, or worse, or about the same? What could you tweak to change that?

Pennywise

Few banks want a business plan if you're not wanting to borrow. If you're wanting a loan or overdraft, then a business plan is probably needed. Did you actually talk to anyone at the bank? How many banks did you look into? Most banks will give a basic company bank account with minimal formalities - usually just a simple application form and proof of your ID/address etc.

You're really making life complicated for yourself. I hate to think what your accountant will have to do to sort out this mess for the year end accounts and tax returns. Have you been submitting payroll returns? Have you got written minutes and vouchers for your dividends? You may well have got yourself into a massive overdrawn directors loan situation which will be costly in terms of tax.

Make it number one on your new years resolution list to talk to your accountant about sorting out this mess and number two to go and get a company bank account.

InsideInsurance

kwhybro wrote: »

I know this makes it really hard to ascertain what I've taken out of the business.

I've looked at Coop for a Ltd business account but it's so darn complicated & they're asking for a business plan now which I've never written!

Is is completely necessary for me open one?

No, it makes it very easy to work out what you have taken out of the business, its absolutely everything as you are holding all its money. You better be correctly doing all your returns to show these as loans or dividends or whatever they are from the company to you.

As others have said, under the law a Ltd is a legal entity/ person in its own right. It can own property, run up debts etc. You are a separate legal entity to it. You cannot simply take its assets/ money from it, it has to loan it to you or pay it to you and both of these have tax implications (or you admit you have stolen from the company).

Business plans are sensible things to have in most businesses but the majority of banks dont need them unless you want credit. The only complexity I've ever had opening a business account is around the variance between banks of which threashold of shareholdings they get interested in IDing the shareholders at.

jjlandlord

InsideInsurance wrote: »

No, it makes it very easy to work out what you have taken out of the business, its absolutely everything as you are holding all its money.

I think it is a bit more complicated than that, and that HMRC would look at the facts and intent rather that only which account the money is in.

matt-comparison

As other have said, not recommended at all. Beyond the reasons mentioned here, it will make it practically impossible for you to really understand how your business works and how much money you are netting.

c-m

Even for a sole-trader type business I would try and separate out my personal and business banking just to make reporting easier. For a Ltd company it's almost essential.

If you don't want a fully fledged business account there are a couple of alternatives though they do cost.

http://moneysavinganswers.com/business/banking/how-to-open-a-business-bank-account-with-poor-credit-history/

trailingspouse

a) why wouldn't you want a business account? They're free for the first year with all the high street banks, and even after that they don't cost a fortune (ours costs us £5.50 a month - if your business can't afford that then you'd be better off doing something else, to be frank).

b) why wouldn't you make a business plan? You need to work out whether you business is viable and how long it will realistically take to make a profit. It helps you to get your thoughts in order, and forces you to take off the rose-coloured glasses and see your business through someone else's eyes.