Business bank account advice

RVP991

Hey all,

I need some advice about my business “concept” as it were at the moment.
I started this in 2013 but had to stop due to family reasons, and have recently started doing it again.

I have been selling online virtual currency for a few weeks now and it’s proving to be rather profitable. By virtual currency I mean e.g online game currencies such as Runescape gold. I would buy the “gold” from someone and then re-sell it for a higher price consistently.

I'm actually selling on a third party website who pay me directly via paypal and then I transfer to my bank account. I don't deal directly with others via bank transfer other than to buy "stock".

I have no need to ever borrow money from the bank, and I was advised to open a business bank account. I have registered with HMRC as a sole trader.
However, I’ve applied to two banks now to be rejected and told ‘we cannot support this’. I don’t understand why and where that leaves me?

I really need a business bank account and I’ve been told to lie about the use of the account but what’s the point in that?
I also have ambitions to start running an EBAY business where I would be importing goods from China and selling them online. Could I pursue with this avenue and explain this to the bank? Baring in mind if I do go down the ebay route, I’d still be selling online currencies - would it be advisable to keep this separate?

I honestly don’t know what to do at the moment so any advice is appreciated.
Thanks!

Herbalus

The trouble is that banks don't like virtual currencies as it's high risk for them in terms of regulation. They don't know who you're buying from or selling to, which is problematic regarding anti-money laundering rules as virtual currencies are easier to use for criminal purposes.

I doubt the banks will be able to distinguish between selling game currency or points or whatever (I have no expertise in this), and virtual currencies like Bitcoin, which is why you're having a hard time.

Bare in mind that a bank could quite quickly close your accounts if you lie on application and are then discovered. You need to search for a bank that are happy with what you're doing.

RVP991

Herbalus wrote: »

The trouble is that banks don't like virtual currencies as it's high risk for them in terms of regulation. They don't know who you're buying from or selling to, which is problematic regarding anti-money laundering rules as virtual currencies are easier to use for criminal purposes.

I doubt the banks will be able to distinguish between selling game currency or points or whatever (I have no expertise in this), and virtual currencies like Bitcoin, which is why you're having a hard time.

Bare in mind that a bank could quite quickly close your accounts if you lie on application and are then discovered. You need to search for a bank that are happy with what you're doing.

Yeah I understand what you mean. It's just frustrating, I'm not sure how I am supposed to go about this now I need an account that will send money via bank transfer instantly.

Futuristic

Barclays lets you open a sole trader account online instantly provided you're 18+ and can do their online credit check

RVP991

Futuristic wrote: »

Barclays lets you open a sole trader account online instantly provided you're 18+ and can do their online credit check

I think I'll still get rejected as it says after that I'll have a meeting with someone in-branch.

I've been looking around and seems I can't open a UK bank to do this

RVP991

Bump, anyone else got any advice for me?

TheTracker

RVP991 wrote: »

Bump, anyone else got any advice for me?

I think you've got two obstacles to overcome. One is the nature of your business in the eyes of the bank, and the the second is the nature of your transactions in the eyes of the bank.

The second is possibly the more problematic, and we've had people on the forums who have had their accounts closed for regular dealing with parties the banks feel suspect, so if I was you and I received more than a few deposits a week I'd look to aggregate payments through something like paypal so that your bank account receives few and obfuscated transactions, although of course you give up a hefty commission to paypal. EDIT: I see you already use paypal.

On the former, its about professionally presenting what it is you do in a way the bank would not be turned off but that is still accurate. You really only have to pass this test once. I wonder if you'd get some cachet from becoming a Limited Company rather than a Sole Trader? Opening a company is inexpensive and keeping it running can cost as low as a few hundred pounds a year.

To describe what your business does you can play a straight bat and describe it in terms of what you'd tell HMRC. I imagine that is along the lines of being an online retailer, you are buying and selling IT goods for a profit. Runescape gold might stretch the bank droid's neurons, but you could explain it by way of an example he might understand: buying iTunes gift cards in bulk for deep discount then reselling them at still less than the face value. Show him the page of such sellers on ebay if he doesn't get it. Shouldn't matter to him if they are virtual credits, shoes, or widgets, though it might to HMRC. Unless its an ethical bank where I reckon its fair of them to want to know.

I've opened many company bank accounts in my time and its always a trial to have some pimply graduate want to know all about your business just so they can give you a sort code and account number for you to keep your cash that they earn interest on. Through experience I've learnt to say "It's a start up and I can't tell you too much about it as I'm under NDA, but its in the XX sector".

RVP991

TheTracker wrote: »

I think you've got two obstacles to overcome. One is the nature of your business in the eyes of the bank, and the the second is the nature of your transactions in the eyes of the bank.

The second is possibly the more problematic, and we've had people on the forums who have had their accounts closed for regular dealing with parties the banks feel suspect, so if I was you and I received more than a few deposits a week I'd look to aggregate payments through something like paypal so that your bank account receives few and obfuscated transactions, although of course you give up a hefty commission to paypal. EDIT: I see you already use paypal.

On the former, its about professionally presenting what it is you do in a way the bank would not be turned off but that is still accurate. You really only have to pass this test once. I wonder if you'd get some cachet from becoming a Limited Company rather than a Sole Trader? Opening a company is inexpensive and keeping it running can cost as low as a few hundred pounds a year.

To describe what your business does you can play a straight bat and describe it in terms of what you'd tell HMRC. I imagine that is along the lines of being an online retailer, you are buying and selling IT goods for a profit. Runescape gold might stretch the bank droid's neurons, but you could explain it by way of an example he might understand: buying iTunes gift cards in bulk for deep discount then reselling them at still less than the face value. Show him the page of such sellers on ebay if he doesn't get it. Shouldn't matter to him if they are virtual credits, shoes, or widgets, though it might to HMRC. Unless its an ethical bank where I reckon its fair of them to want to know.

I've opened many company bank accounts in my time and its always a trial to have some pimply graduate want to know all about your business just so they can give you a sort code and account number for you to keep your cash that they earn interest on. Through experience I've learnt to say "It's a start up and I can't tell you too much about it as I'm under NDA, but its in the XX sector".

Thanks for the info, much appreciated.
I'm not sure how to apply, as I've applied online and then received a call back to say my application was unsuccessful. I went to a bank and applied face to face only to be told they don't 'support' my business idea. So you are saying I should just be vague about what I do e.g say I am an online retailer that sells products such as iTunes cards and re-sells them? Baring in mind I don't deal on ebay - does the bank ask to see any proof / statements some months down the line?

As with HMRC would it be an issue to them? I'm not really doing anything wrong and I'm being open and honest about the goods I am selling.

Thanks!

jonesMUFCforever

If you follow the above advice - you may get an account to begin with but it may be closed soon after.

RVP991

jonesMUFCforever wrote: »

If you follow the above advice - you may get an account to begin with but it may be closed soon after.

What would you suggest I do then?

Caladan

I can see two main issues with your business (which have been touched on already).

1) The source of the funds you will be paid with are difficult to identify - PayPal credits could be for anything. This will probably cause alarm bells to ring for any bank with a half decent anti money-laundering system.

2) Your business may be legal, but it's morally questionable, and banks don't like reputational risk. Most games ban real money trading in their terms and conditions, breaching those terms is probably not illegal in itself, but it's certainly not something a bank is likely to support.

Ultimately though, I think the biggest problem relates to 1. Even if you lied about the nature of your business, I can't imagine a bank wanting to take the risk of providing financial services to a business where it's almost impossible for them to verify the actual nature of the business. Especially when the revenue you produce the bank is likely to be minimal, if not loss leading.

Whilst I admire your buy low, sell high attitude, my recommendation is to think of something else to make money from. What you do harms the gaming community and is expressly forbidden by the game producers (who are hard working people like you and me (well, at least you, not sure about me)) for good reasons.

Not a Runescape player, but a quick look at their site says this:

"Real-world trading
Game items must only be exchanged for other items/services within the game.

Nobody has our permission to sell RuneScape accounts or any RuneScape related virtual in-game item. All RuneScape accounts and virtual items are the property of Jagex Ltd and players are only granted a limited, revocable permission to use accounts and virtual items."

Edit: I feel I should add - The paragraph above essentially confirms you are selling something that does not belong to you. If the producers of Runescape choose to delete it, or shut the game down, the buyer has no recourse to you as the seller (other than by legal action). I cannot see how that would be morally acceptable.