Self Employed Bank Account

MortgageMamma

Hello

I am returning to work in a self employed sole trader capacity after a lengthy absence. I want to keep my business money separate from my personal joint account with husband as from experience it can get messy for accounting purposes, so I need to open another account.

That's the straightforward bit. I notice a lot of current accounts want a guaranteed monthly amount paid in and a certain number of direct debits going out. I work from home therefore don't have many business expenses as such and as I work as a mortgage adviser it could be 3-4 months until I get my first batch of commission off my pipeline business.

I don't know whether to open a normal fee free current account without a switch, or if to look at business banking? and if so what accounts would I be eligible for and who is the best business banking provider currently.

I've read through Martins guide and nothing seems to sit right with my circumstances and as I'm in the process of getting authorised to work I can't get loads of credit checks done with different banks.

Its been a long time since I opened a new account I've been with NatWest with what feels like forever and still want to use that account for payments of tax credits, child benefits etc.

Any suggestions?

Kernel_Sanders

Do you get any business from the USA?

https://forums.moneysavingexpert.com/discussion/5376859

Tragen

Why not open a simple bank account with natwest, co-op, nationwide etc.;

I use one for business (sole trader too), but then I only deal with bacs transfers in, and transfers out. I dont need an overdraft or cheque book, but do need a visa debit card to buy for my business.

Zanderman

If you want to use an account for business use, open a business account. Don't open an ordinary account and use it for business however tempting it is. You'd be breaking the terms and conditions of a personal account if used for business transactions and, if the bank notices this, they might close the account. They might not notice of course, but it is a real risk and if they do notice it will create hassle for you that you don't need.

Business accounts are more trouble to open (you need to give details of the business) and almost always, these days, have a monthly fee and sometimes extra costs for some transactions. But they're above board, you get some level (not that I've ever had cause to use it) of business support and they give the business some identity (as the account can be in the business name). That last point in itself, is arguably worth a monthly fee as it looks much more professional - even if it's just 'John Smith Associates' or similar.

Yorkshire, I think (haven't compared these for a while) have (or had) the best offer for start-ups - 25 months of free banking. But ideally you would need to be near a branch now and then and Yorkshire bank branches aren't very common over much of the country (unless you're in northern England).

Tragen

Zanderman wrote: »

Don't open an ordinary account and use it for business however tempting it is. You'd be breaking the terms and conditions of a personal account if used for business transactions and, if the bank notices this, they might close the account.

Is this explicitly true? When I applied for a co-op cash-minder account for this very reason, I told them in the branch why I wanted it and were very helpful, the lady I spoke to even told me about how useful it is to be able to pay cheques in at the post office.

I've seen it recommended many times to use a current account if a sole trader, unless dealing with a large amount of transactions.

EarthBoy

Tragen wrote: »

Is this explicitly true?

It most certainly is. Please see paragraph 1.3 of the Cashminder terms and conditions, where it states:

You can only use your Account as a personal account. You must not
use it as a club, charity, sole trader, company, partnership or other
kind of business account or for any business purposes. Failure to
comply with this requirement may lead to the Bank giving you notice
to close your Account in accordance with condition 19.2.

http://www.co-operativebank.co.uk/assets/pdf/bank/currentaccounts/cashminder/cashminder-terms-and-conditions-5-jul.pdf

Tragen

Thanks, interesting! I wonder if that was in the terms when I opened mine? I'm guessing it probably was.