Business Accounts - whats the point?!

russellclow

Hi All,

I'm a self-employed Sole Trader from the UK. I have a moderate business turnover (£30,000-40,000 P/year) and simply use a current account with Lloyds and a Savings account to transfer money into.

I have, however, recently picked up a project that will push my turnover to well over £100,000. It's likely to be only this year, as I 've never had a job of this size, and doubt I will again anytime soon! I was toying with the idea of getting a business account set up, so that all my business income goes in there, and then I transfer it back out to my current account/savings as required...

However having looked though various business accounts, all I see is a monthly fee for the privilege of having the account with a label saying "business". So my question is, what's the point? I assume I'm missing something as to why I should be using a business account at a monthly fee rather than simply using my current account? As far as I know, I have no legal obligation to set one up for my business income?

Any advice on if I should set one up (and which is the best for my turnover) would be great!

eskbanker

russellclow wrote: »

I assume I'm missing something as to why I should be using a business account at a monthly fee rather than simply using my current account? As far as I know, I have no legal obligation to set one up for my business income?

No legal obligation but you have to operate any account in accordance with the Ts & Cs, and the Lloyds ones include:

You must not open or use a personal account to hold money for someone else (including as a trustee or personal representative) or for the purpose of a business, club, charity or other organisation without our consent.

russellclow

Thanks for taking the time to reply, I appreciate it!

Do I count as being a 'business' if I'm a sole-trader/self-employed? I was under the assumption that I'm only a 'business' if I'm registered as a ltd company.

Incidentally, a few years ago Lloyds (TSB as it was then) tried to 'sell' me a business account, but I said I didn't want one, and they said that's fine. So they are aware - whether they have to give written consent or not I don't know.

eskbanker

russellclow wrote: »

Do I count as being a 'business' if I'm a sole-trader/self-employed? I was under the assumption that I'm only a 'business' if I'm registered as a ltd company.

I don't know how Lloyds interpret the term 'business' but don't see any explicit reference to this being associated with limited company status, although the MSE article on business bank accounts does suggest that sole traders may be OK with a personal account, albeit with the inevitable caveat that this is subject to Ts & Cs, so it is all a bit circular!

At the very least, it would be prudent to open another current account with a non-LBG bank, so that if Lloyds decided not to play ball then you'd have access to alternative banking facilities....

russellclow

Great thanks for your help!

I still don't really seen the benefit of opening a Business Account (particularly for a sole trader) other than for the bank to get paid £x per month

badger09

There is no legal requirement for a sole trader to open a separate current account, because the business is not legally separate from the self employed sole trader running it.

However, most banks include clauses in their T&C which preclude personal current accounts being used for business purposes.

The business bank account charges can of course be set against profits.

diamonds

Further to Badger^ As a sole trader there is no protection between personal and business assets and liabilities, one are all the same as I'm sure you already know.

It just makes admin easier keeping them apart, well it did me.


T&C are not clear, self employment as a sole trader is not a business in the traditional sense, but then again it is for other purposes.



BOS did not like it on a personal account (pre LBG), Abbey didnt care, even though I ended up with a Abbey Bus A/C which was when it was Visa Electron card and I could not use my card for its main purpose FUEL!

BOS funny enough started getting wary when my personal account they knew was business use aswell was hitting a turnover close to the VAT applicable threshold?? That may be applicable to your circumstances also.

jimjames

Santander business account is free, I believe one or two others are as well, certainly for a set period. Maybe that's long enough before you drop back to old income

SuperHan

(total aside, but don't forget your VAT registration requirements - I see people missing them all the time, and it is a huge pain if you do)

diamonds

jimjames wrote: »

Santander business account is free, I believe one or two others are as well, certainly for a set period. Maybe that's long enough before you drop back to old income

Was 12 months a few years ago

diamonds

diamonds wrote: »

Was 12 months a few years ago

18 months for new start ups now


http://www.santander.co.uk/uk/business/current-accounts