Using personal bank account for Ltd company?!

bazzyb

Suarez wrote: »

You cannot have a personal account and run your business through it.

Yes you can, but it is strongly recommended not to do so.

Pennywise

bazzyb wrote: »

Yes you can, but it is strongly recommended not to do so.

It will almost certainly be against the terms & conditions you signed when you opened your personal bank account. So yes you can, but you'd be in breach of the bank's T&C's and they'd be within their rights to close your account with no/little notice.

thenudeone

A limited company is a completely separate legal entity from you (even if you are the only director, employee, and shareholder).

For example, if you die - the company still exists and any assets it has, and any ongoing contracts, also still exist.

You simply don't have the legal right to put money belonging to the company into you own personal bank account. It belongs to the company. If its in your own bank account and you die, how can the creditors of the company ever be paid?

If the company were to be unable to pay its debts and placed into administration (These things happen), you would be in very deep trouble as a director for deliberately removing money from the company for your own benefit ahead of other people owed money by the company. Even if that might not have been your intention, it has the same effect.

You really should not be doing this. Period.

c-m

The above is mostly true. Though legally you only have to distinguish between company and personal transactions.

The odd thing is though that despite being a completely separate legal entity, the directors must pass a credit check to be able to open an account for their company. Unfortunately I think rejection here causes some to just a personal account.

thenudeone

No
It's All true.

You are getting mixed up with a sole trader, who does not have a separate legal entity.

You have no more right to put a cheque into your personal account which is made payable to a limited company than you have to do so with a cheque payable to any other person, i.e. no right at all.

If you disagree, please tell me which bank does not prohibit such an activity within its terms and conditions? You won't find one.

c-m

Legally you only have to keep company transactions separate. Show me a law that says you need a separate bank account.

You are right though. Any money received by the business belongs to the business, which is a different entity to yourself.

Companies Act, s 221 requires accurate accounting records to be kept, which must contain day to day entries of monies spent and received. The Act does not prescribe the form of the accounting records, but directors have to guard against their falsification (CA 85, 722). Failure to keep proper accounting records could lead to imprisonment (CA 85, s221).

I don;t know why you ask me to show you what banks allow or don't allow. That's neither hear nor there when discussing a point in law. I know what you are saying though.

TBH I think we're mostly talking cross purposes. Whilst there is no specific law requiring a business to have a separate bank account, or even a bank account at all, using a personal account for an extending time isn't really workable.

Mistral001

thenudeone wrote: »

No
It's All true.

You are getting mixed up with a sole trader, who does not have a separate legal entity.

You have no more right to put a cheque into your personal account which is made payable to a limited company than you have to do so with a cheque payable to any other person, i.e. no right at all.

If you disagree, please tell me which bank does not prohibit such an activity within its terms and conditions? You won't find one.

My bank knows about my business which is 16 years old and they have never complained that I just use my personal account for business. I do not have many business transactions going through my bank and I am a sole trader.


They probably have a clause in their terms and conditions about business use etc. but I suppose it makes good business and PR sense not to close my account.


Getting back to the OP's posts. I think the OP needs to see an accountant fast. It is better that an accountant "throws things at you" rather than HMRC. The fact that you have started a Ltd company changes everything. The money you get from customers has to go to the Ltd company and not you as others have said. If it goes to you then you and not the company then as others have said you are breaking all sorts of rules or worse.

bazzyb

thenudeone wrote: »

You have no more right to put a cheque into your personal account which is made payable to a limited company than you have to do so with a cheque payable to any other person, i.e. no right at all.

I'm not sure where you are getting this misinformation but what you have posted is not accurate. So long as there is something documented to say that the individual is holding the funds as bare trustee, and the individual is receiving no benefit (i.e. the funds are not being used as a loan), then there is no reason why this cannot be done.

I notice you are referring to cheques, which may present some problems if the bank refuses to accept them - but nowadays the likelihood is funds will be transferred by other means.

Notewithstanding the above, whilst it is possible, I still agree with others that it is not practical and it would be far better to have a separate dedicated bank account.

w211

Self employed sole trader, been using my personal account for years.

Makes no difference, if a wage from a PAYE employee goes into their personal bank account, or income for someone who is self-employed in the same job does so as well. Especially as most of my income is paid weekly by cheque, with the odd BACS transfer every month. How are they to know?

Mattygroves2

bazzyb wrote: »

I'm not sure where you are getting this misinformation but what you have posted is not accurate. So long as there is something documented to say that the individual is holding the funds as bare trustee, and the individual is receiving no benefit (i.e. the funds are not being used as a loan), then there is no reason why this cannot be done.

That might be fine for a sole trader or even an employee but we are talking about a Director (I assume as they set the Company up) and a Limited Company so any funds the Director holds in behalf of the Company become a Directors Loan which has got tax implications for both the Director (P11D Benefit in Kind) and the Company (Corporation Tax) if not paid back within 9 months of the Company year end.