Use of personal bank account as a sole trader

Dalglish

Many of my colleagues see no issue with using a separate personal bank account for their sole trader business.
My tax advisor has said it’s best to have a business account even in low turnover businesses.
I appreciate different banks may have different policies on this.
What’s the answer - a fee based account for business with little benefit or use a personal account?
Many thanks!

colsten

You'll find that the T&Cs of all current accounts specify that they are for personal, not business, use. You'll also find endless wailings "bank closed my account without notice" from people who haven't paid attention to the T&Cs.

ValiantSon

Dalglish wrote: »

Many of my colleagues see no issue with using a separate personal bank account for their sole trader business.
My tax advisor has said it’s best to have a business account even in low turnover businesses.
I appreciate different banks may have different policies on this.
What’s the answer - a fee based account for business with little benefit or use a personal account?
Many thanks!

You need a business account. The terms and conditions on a personal account forbid use for business purposes. If the bank thinks it is being used for business purposes then they can, and will, shut the account and most likely refuse to have anything more to do with you, i.e. no accounts of any sort in the future.

Dalglish

What’s interesting is I’m being seen as trouble by my group of friends one of whom has, in her words, gained agreement from her Santander branch to open a separate 123 current account solely for her sole trader business. She’s claimed the bank have agreed based on the relatively low number of monthly transactions (unsure what she means by low number).
Her words “.... that’s why I spoke to the bank and mentioned the Ts and Cs and he said for the size of the business it was fine. I’ve told her , great , Im off to get the same deal from my branch tomorrow ... you know what’s going to happen ...

EarthBoy

Your friend might get away with it if she only has a few transactions each month because Santander may well not notice. However, what's she's been told verbally isn't binding and if they ever do realise she's using the account for business purposes they will probably close it.

molerat

From Santander Personal Banking general T&Cs. Pretty clear really.

You must not use the account for business purposes.

If you are in significant breach of these Conditions or the Specific Conditions on your account, (or if you have failed to remedy a breach where we have asked you to do so) we may close your account on giving immediate notice or less notice than that specified in this Condition.

Shakin_Steve

Dalglish wrote: »

What’s interesting is I’m being seen as trouble by my group of friends one of whom has, in her words, gained agreement from her Santander branch to open a separate 123 current account solely for her sole trader business. She’s claimed the bank have agreed based on the relatively low number of monthly transactions (unsure what she means by low number).
Her words “.... that’s why I spoke to the bank and mentioned the Ts and Cs and he said for the size of the business it was fine. I’ve told her , great , Im off to get the same deal from my branch tomorrow ... you know what’s going to happen ...

Ask your friend to show you the written confirmation of her 'agreement'.

TonyMMM

I run a business as a sole trader, and was advised by Santander staff to use a 123 account, mainly because of a small number of transactions each month. Been running for a number of years without a problem.

System

TonyMMM wrote: »

I run a business as a sole trader, and was advised by Santander staff to use a 123 account, mainly because of a small number of transactions each month. Been running for a number of years without a problem.

They may tell you this 'off the record' but it's against the T&Cs.

It may go under the radar but is liable to closure at any time - likely along with any other Santander products that you might have.

dunstonh

My tax advisor has said it!!!8217;s best to have a business account even in low turnover businesses.

It is. Otherwise, your accountant has to sift through personal transactions and business transactions which will take them far longer and increase your accountancy costs.

What!!!8217;s the answer - a fee based account for business with little benefit or use a personal account?

You forgot to include increased accountancy costs in that comparison.

agrinnall

The word "significant" in the extract quoted by molerat may be what allows individuals at Santander to give informal permission to use the account for business purposes - but I would expect the definition of significant to be up to them so they could still close the account if they decide any business use is unacceptable.