Business or Personal Account?

c-m

yeesha04 wrote: »

Good day all, Again am on an enquiry with regards business account. I need to open a business account and I went to my day to day bank where I hold my current account. This has been declined due to poor credit rating, is there any advice on where and how I can get one opened please

Yeesha, you should probably have your own thread for this, but here's my thoughts.

If you're a sole trader there is no need to open a business account, but you do somehow need to separate personal and business affairs. An easy way to do this is to open a basic bank account and use that for the self employed affairs.

This works better if you only have a few larger income deposits/transactions a month. If you're selling on ebay and like and have lots of small transactions, you'll want a proper business account to avoid upsetting the bank.

There's no such thing as a basic or even a no-frills business account. They are all credit checked. So the first step is to check through your credit file and make sure everything is in order.

Natwest have the foundation account which is aimed at those starting a business but with little credit history, but they no longer actively advertise it, and it still requires a credit check.

This guide is particularly useful and guides you through the steps of opening a business account: http://moneysavinganswers.com/business/banking/how-to-open-a-business-bank-account-with-poor-credit-history/

Archi_Bald

c-m wrote: »

If you're a sole trader there is no need to open a business account, but you do somehow need to separate personal and business affairs.

It doesn't matter what sort of a business it is - all current accounts state in their T&Cs that they are for personal use only, not for business use.

People who choose to ignore those terms might find themselves sooner or later with a letter from the banks advising that the current will be closed.

c-m

This is true. And it's important to know, but many on these boards do seem to treat it like the end of the world. "OMG that's against the bank's T&C, kittens will die. (slight over dramatisation)

Personally I don't believe it to be as common as or as bigger deal as people on here make out though.

For example, a freelance worker working for an agency for a few months is likely to be paid the same amount from the same company for a certain period of time. It just looks like wages.

Now someone selling online with 100s of small transactions would be really taking the micky if they were using a personal account.

I know a fair few self employed people. Dace teachers, musicians etc.. All of them use a personal account.

It's important to understand what the bank means by "business use"

eskbanker

c-m wrote: »

I know a fair few self employed people. Dace teachers, musicians etc

Sounds a bit fishy to me!