quick question as a sole trader regarding accounts

Nndh1

Gosh a lot of information to take in there. Hadn't realised it would be such an issue.....like someone mentioned having china on their windowsill...

Thank you everyone for your replies and advice. I'm still none the wiser so I will get an accountant.

Just a quick question out of curiosity really......Say for example someone sets up a business buying and selling property. They buy a run down house with the intention of doing it up to sell, they live in the house whilst they do it up. Would this be personal or business? I'm just curious because is that not a similar thing but just on a grander scale? After all they don't need to live in it, but it's a perk if you like. I'm just trying to get my head round it. Seems everyone has different ideas about whats ok and whats not....

Mistral001

Pennywise wrote: »

I have never yet seen a bank's personal account terms & conditions that allow business use of a private bank account.

Yes, lots of people do it and aren't caught, but the bank would be within their rights to close the account.

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I have been using my personal bank account for my business for 22 years. My bank is fully aware of this and I have often discussed my business with bank staff. So hardly a case of not being caught as you put it. They are obviously making money from my custom and do not enforce their terms and conditions in this regard. Some banks do enforce them to the letter, but that is just a business decision they make.

Only about 10% of my transactions through my account are business related. Most are personal.

Savvy_Sue

There are Very Special Rules relating to property development, and you don't want to go there ...

Mistral001

nmn wrote: »

This is off topic but it is still worth pointing out that there is no legal requirement to have a business (or indeed any) bank account for limited companies.


OP (and others) are reminded they should be careful what is posted on forums, and be sure to verify everything thoroughly themselves or with an expert.

This is interesting. The requirement to have a business bank account for limited companies is often mentioned of this forum. It must be one of those urban myths.

Pennywise

Mistral001 wrote: »

This is interesting. The requirement to have a business bank account for limited companies is often mentioned of this forum. It must be one of those urban myths.

There's no "law" as such but it's not an urban myth either. There are good reasons for the advice to get a proper business account. There are some pretty costly tax implications if you don't keep on top of it and follow procedures, and it's really not at all practical for any decent sized company, especially any where you may receive cheques as I've mentioned above. You can just about get away with it for a small/hobby company where the figures are small. For practical purposes for a "proper" limited company making profits, then a business account is virtually essential.

edgex

Mistral001 wrote: »

This is interesting. The requirement to have a business bank account for limited companies is often mentioned of this forum. It must be one of those urban myths.

A limited company is an individual legal entity, it is not the same as the directors.
Therefore you won't be able to receive/make payments etc in the company name, so you won't be able to operate the company.

edgex

Nndh1 wrote: »

Gosh a lot of information to take in there. Hadn't realised it would be such an issue.....like someone mentioned having china on their windowsill...

Thank you everyone for your replies and advice. I'm still none the wiser so I will get an accountant.

Just a quick question out of curiosity really......Say for example someone sets up a business buying and selling property. They buy a run down house with the intention of doing it up to sell, they live in the house whilst they do it up. Would this be personal or business? I'm just curious because is that not a similar thing but just on a grander scale? After all they don't need to live in it, but it's a perk if you like. I'm just trying to get my head round it. Seems everyone has different ideas about whats ok and whats not....

It's business, & the person living there is receiving a 'benefit in kind', which has tax implications.

00ec25

edgex wrote: »

It's business, & the person living there is receiving a 'benefit in kind', which has tax implications.

only if purchased in the name of the company.
if purchased by a sole trader, the tax liability would "merely" be that of a property developer subject to income tax

martindow

Pennywise wrote: »

Slippery slope there.

It's not diminution in value which determines the "benefit in kind" or private use add-backs. It's the use itself.

The tax laws are quite clear on how "private use/benefit" is taxed and there is no mention about being taxed on how much something loses value over the time it's used personally.

You can't just apply your own logic/reasoning when it comes to tax law.

If she were the keep a dress permanently then it is clearly for private use and there is a need for it to be shown as a sale.

In this case the OP suggests that these clothes are being bought to be sold on in the business. If she wears the dress and then carries on to sell it I can't see that it is much different to it being left on a hanger during that period. How is the business to account for this if the value is unaffected?

I suppose she could buy it for £20 and sell it back to her business for £20 a fortnight later. Provided VAT is not involved this just seems to be unnecessarily complicating the books.

Pennywise

martindow wrote: »

If she were the keep a dress permanently then it is clearly for private use and there is a need for it to be shown as a sale.

In this case the OP suggests that these clothes are being bought to be sold on in the business. If she wears the dress and then carries on to sell it I can't see that it is much different to it being left on a hanger during that period. How is the business to account for this if the value is unaffected?

I suppose she could buy it for £20 and sell it back to her business for £20 a fortnight later. Provided VAT is not involved this just seems to be unnecessarily complicating the books.

You could say the same about a house. It won't depreciate, so the business buys it, the owner lives in it, and then sells it afterwards. There'd be personal tax on the owner even though the value of the house hasn't fallen.