Avoid business bank fees

prankard

Hi there ,

I've been self employed for 8 months now And have a business bank account to keep all my finances very separate, and gives me a good indication on what I'm earning from my business.

I've had about £95 in bank fees so far (mostly in non-standard transaction fees for buying software in euros/dollars). It's only just occurred to me that I could have easily made these purchases from my current account, and have paid the value into my business account for free.

Is this common for people to do, could it be breaking any terms and conditions that you could know of.

Now that I've realised this, my girlfriend who is also self employed (drum teacher) makes all her sales in cash. And now wishes to pay herself into her current account, and transfer the value to her business account.

Is there any reason we shouldn't do this?

Thanks for reading,

James

anselld

It somewhat defeats the object to have a business account and then not use it. It is generally against the terms of a private account to use it for business purpose, but I don't think it is a problem with HMRC so long as you can adequately account for the income/expense.

Why not just get a no-fee business account, eg RBS Direct Business Banking?

someone

anselld wrote: »

Why not just get a no-fee business account, eg RBS Direct Business Banking?

I think the question is about fees for $ and € transactions for which the OP has racked up ~£95

Can I ask what bank you are with at the moment? I only the other day looked at the Santander Business account but could not find what fees where on foreign VISA transactions , just ATM transactions (and it was too late to ring them up to ask).

Zanderman

anselld wrote: »

Why not just get a no-fee business account, eg RBS Direct Business Banking?

Does that still exist for new customers? Free business banking seems to be extinct, apart from intro offers (e.g. Yorkshire Bank offering 2 years free for new, or 18 months free for switches).

agrinnall

The real answer to the first part of your question is to not use your bank to transact in a foreign currency, use a Forex broker instead. Or get a personal fee free credit card, make the purchases on that, and repay yourself from your company account with an expense claim.

Watergirl

Are you a limited company? If not, you don't need a separate business bank account and can therefore avoid fees. Most companies will offer introductory business rates, but these are usually for a maximum of 2 years.

colsten

Watergirl wrote: »

Are you a limited company? If not, you don't need a separate business bank account and can therefore avoid fees.

This is not true. T&Cs for personal bank accounts exclude all business use.

If you choose to ignore the T&Cs, despite having agreed to them, you are running the risk of joining all those who had their accounts closed at very short notice.

Watergirl

They might exclude business use, but that's only to encourage customers setting up a paying bank account for business use. I doubt you'd find a single case of a bank taking issue with an account used for joint business/personal use or even sole business use, by a sole trader. Or an Accountant that would advise paying for a separate account when you can use a personal one.

henm2

All the banks exclude using a personal account for business purposes. Two examples below

HSBC page 21 of personal terms and conditions

“You must not use your account for business purposes.”

Lloyds Banks personal terms and conditions page 3

“This agreement only covers banking services we provide for your personal use. We have different agreements if you are a customer for the purposes of a business, club, charity or other organisation, or if you are acting as a trustee, personal representative, partner or sole trader”

Watergirl

Didn't disagree, just offered a common sense approach to this. Speak to any Accountant and they'll likely say the same. See above.

Herbalus

Watergirl wrote: »

Didn't disagree, just offered a common sense approach to this. Speak to any Accountant and they'll likely say the same. See above.

Your "common sense approach" is basically advocating using a personal account for business purposes, when this is against the terms and conditions of all personal accounts. You can't just say you agree but that it's sensible to do it anyway.

Banks can and do close people's accounts for doing this.

No accountant worth his salt would recommend what you're saying.