Going self-employed, need a Business Bank Account

matt78uk

Hello everyone,

I have been lurching this website and forums for many months now but this is my first post. Hope this is the right place for this topic, if not have mercy and move it to a more suitable place. :A

First a little bit about myself: I used to work as a Pharmacist for a large Pharmacy Chain but after more than 4 years I had enough and resigned. For the last 6 weeks or so I have been working as a locum Pharmacist: I am self-employed, working in a different store every day, different companies (both Chains and Independents) and enjoying it so far. I have been in touch with a financial advisor that will sort out the little savings I put apart in the last few years (at the moment I have a joint Account with my other half that gives us something like 1.5%...) and I have talked with a few Accountants (I think I finally managed to pick one out of them! :j ).
I am going to open a Limited Company, I will open a Business Bank Account and I would like to open one Current Account for me and one for my partner. As my partner is not working she will start doing some book-keeping for me and I am going to pay her so she can put something towards a pension and also because she works hard at home and it's only fair that she gets paid for it. I don't think it's going to be a problem opening a Current Account for her, I will probably Open a TSB Plus that gives 5% on up to £2500 (3% from January but I couldn't find a better alternative as Nationwide requires an income of at least £1000/month ... :wall: ), but I am not sure about my Business Account. Everybody I have asked say that it doesn't make a difference and that they are all the same, what do you guys think? Do you have any recommendations?
Also, if I can add a second question, somebody mentioned that after opening a Ltd he was paying himself the minimum wage and he would draw the rest as dividends, does it make sense?

I would really appreciate any feedback,
thanks in advance! :beer:

Matt

tribpot

I do my business banking through Santander. No complaints.

I would be careful about paying your partner a salary, it does need to be for work done (which it sounds like she will be doing). In my limited company, my husband and I are both shareholders and so I pay a dividend to each of us each month. This might make sense.

I would take advice from an accountant about how best to draw money down from the business account but a basic wage + dividends is normal in my experience. Talk to your accountant as well about the appropriate VAT scheme for you.

Sounds like your invoicing could be quite complicated if you're working for lots of different pharmacy chains? Or is all the work coming through one locum agency?

matt78uk

Hi Tribpot,

thanks for sharing your thoughts!

I am signed up with 4 agencies, but I don't pay them, they are paid by the Chains in order to find suitable candidates. I have also contacted a couple of Independents directly with no chains involved. The payments do not seem to be very complicated so far: I leave an invoice with my Bank Details at the end of the day (or days if I work for several days in the same store) and they pay you depending on their rules; some of them pay you on the same day every month, some within a fortnight of your shift...

I will certainly ask my accountant for advice on the matter, but sometimes it's better to go prepared and it's helpful to learn from others, particularly if they have been through something similar.

Matt

jennyjj

matt78uk wrote: »

what do you guys think? Do you have any recommendations?
Also, if I can add a second question, somebody mentioned that after opening a Ltd he was paying himself the minimum wage and he would draw the rest as dividends, does it make sense?

I would really appreciate any feedback,
thanks in advance! :beer:

Matt

Hi Matt,
When setting up a ltd company, It's accepted practice to minimise total Tax expense by paying a salary just below the Threshold for National Insurance ( about £8k look it up ) and then drawing dividends below the level that you have to pay income tax on them ( iirc £15K)
If you have a wife/husband/partner who doesn't pay tax, then consider having two classes of shares, one with voting rights ( yours) and one with no voting rights ( his/hers ) then you can split the dividends between you in the most tax efficient way possible, all under your control. Consider registering for VAT as until your b-c sales are significant, you can get the tax man to pay you for all the vat costs of setting up your business.
Consider using HMRC Basic PAYE software for your payroll. it's free and easy to use.
As to bank accounts. So long as you don't want an overdraft facility, they are easy to set up. I use Santander. There is a modest monthly fee, but running it online is a breeze.

Mr.Generous

18 months free business banking at HSBC then very modest fees.

matt78uk

Thanks for your reply Jennyjj,

it sounds quite complicated and I am just looking into it (didn't know about non-voting shares!). I will raise the subject with my accountant, hopefully some savings to be done there!

Mr.Generous thanks for the suggestion, I will look into it!

Matt

jennyjj

matt78uk wrote: »

Thanks for your reply Jennyjj,

it sounds quite complicated and I am just looking into it (didn't know about non-voting shares!). I will raise the subject with my accountant, hopefully some savings to be done there!

Mr.Generous thanks for the suggestion, I will look into it!

Matt

Happy to help,
The rules are a bit complex, but the mechanics are not too bad. It's up to you how much you entrust to your accountant and a lot depends on the nature of your business. Try to get an accountant that empowers you by explaining how you/your bookkeeper should do stuff, rather than having him charge you for the gruntwork.
Payroll PAYE with the HMRC software needn't take you 15 mins per month per employee with no ongoing cost. VAT might be a quarterly faff of a few days bookkeeping and CT accounts, a bit of too and fro-ing with accountant once a year, thankfully not untill 18 months or so of start of trading. Get a bit of advice on share capital structure. Companies house is a good resource. You can pretty much define all sorts of shares, some with votes, some without. and then as the holder of voting shares, you can allocate dividends to whichever shareholders pay least tax.
your ltd company will pay Corporation tax on profits after salary, but before dividends. so that's 20% of profits or so. Modest salaries would reduce that CT, because it's a cost to the business. So that bit of profit would incur PAYE and NI, which can be nill if below your NI and personal tax threshold.
As a director, you will need to do Self Assessment.

Get your accountant to set you and your bookkeeper up to be as self reliant as possible, but with just a few pointers as to the best approach. The ideal accountant will clarify everything and will work with you to get on the same wavelength. Some will want to do your gruntwork, some will respect your wish to do it yourself and will make it easier for you. Invest 20 quid or so in ltd company operation.

Typical provincial accountant about £1k pa for Corporation Tax where you present him with a spreadsheet or similar and an easy to understand summary. You'd expect a few hours worth of dialogue/advice for that, ( take bookkeeper along ). If you have him do gruntwork with invoices, he'll delegate that to some office manager or junior and charge you a shedload per hour at silly money rates, so, a lot to be said for for doing that in-house.

ohit

If you are in the London area, MetroBank - free business banking with a £5k average monthly balance.