Do I need a business bank account?

tanker21

TracyATR said:

There is no legal requirement for a Ltd company to have a business bank account so I don't think you should be telling people they 'must' have one as it's simply not the case. It may be advisable if you have specific business expenses for say stock, materials or wages but if most of your expenses are 'grey' then just identify them as you go along on a spreadsheet (separating capital expenses from general expenses as you normally would for ease of reference later on) and charge the lot as expenses to the Ltd company at year end. I've had a client operating as a Ltd company being told they'll be reported for not having one by a bank clerk, I simply asked 'who to?' They couldn't tell me, because there is no legislation to say you must have one. Also, to save on bank charges if you want a separate account, you can have more than one personal current account so just open another for business use if you want to, taking note of t&c's of course. The only thing to monitor is that funds equal to those shown in the accounts are available. A Ltd company is a separate legal entity after all and where less funds are available you'll need to account for it. You can't spend company monies personally without having shown it drawn as wages, dividends or expenses repaid, so this option isn't for those who see it and spend it!

I take issue with this but I can't be bothered to look up the Companies Act to prove it. Instead I'll go down a different route: Legally, a limited company is a separate "person" from its owners (the shareholders). As such it can indeed own assets (cash, money) in its own right (as previously pointed out by Zanderman). If that money is in the owner's bank account, then that is a loan from the company to the owner. Typically in a small business situation,the owner will also be a Director of the company. The law and tax authorities take a dim view of loans to directors and there are specific reporting requirements and onerous tax treatments basically aimed at discouraging them. All of these can be avoided simply by having the money in the company's bank account, where it belongs. Key takeaway: If you're a director, avoid loans from your company (unless you're very sure what you're doing).

jonesMUFCforever

This thread died in April - why bring it back now? (I do agree with you).

Horol

I am a freelance individual acting as a sole trader and have been for around fifty years. I am looking for a bank, any bank, that will give me a single account (I don’t care what it is called) that allows me to order foreign payments via internet banking quickly, securely and correctly. Do you know of any? The reason I ask is because of the following: Late last year I visited and instructed my bank, METRO Bank, to make a payment to Switzerland (to a well established auction house) but this was returned unpaid. No reason was provided and I had ‘lost’ just over £100 in currency transfer fees. This was alarming, not only for the loss but the effect it had with my client, the auction house.

I again visited my bank and requested the same transfer on the presumption that a mistake had somehow been made. I did however check and re-check all the codes with the Swiss auctioneer first. Another transfer was made and again returned with the loss of a further £100. At this point I opened up a formal complaint with METRO Bank. I then asked a friend to pay the Swiss auctioneer as I could no longer trust my bank.

The formal complaint was dismissed as METRO said an address was missing from the information supplied. Why they put this mistake at my door I have no idea as I was at the bank and provided all the information they requested. The address they told me was missing was visible at the time and freely available to the person making out the request form, both times. I have not yet but will be taking this complaint to the Financial Ombudsman as there is no question that METRO made the mistake, not me. It gets worse (too long to put here), which is why I am looking for a new bank that can handle foreign payments correctly.

Any help will be gratefully received, thank you

colsten

You could check out https://www.starlingbank.com/sole-trader-bank-account/

Also Starling's Money Transfer Service: https://www.starlingbank.com/send-money-abroad/send-money-to-europe/.

Generally speaking, transferring funds to other countries through traditional banks is very expensive. Using a currency transfer service like Starling's makes much more sense. https://www.monito.com/ is a comparison service for most (not all) currency transfer services.

phdands

I found the business bank account article really helpful. I opened a shop in November and have struggled to find honest reliable financial advice for a small business and will be very happy if MSE starts giving advice to small businesses!
I would consider myself financial savvy (change bank accounts, credit cards, utilities, savings, compare, read small print etc to get best deals) and not someone who is easily taken in. But I have had a nightmare as a small business - I've signed up to business utilities, credit card payment system and EPOS systems all of which I found after sign up I have been mis-sold - ie the information given me at time of sign up was not correct, but as a small business I have no protection or recourse to get out of the deals. Not only is this costing me money I can't afford, it is taking valuable time that I don't have trying to sort out the problems, and makes me feel like an idiot which is not great for mental health!! 

charlesyates

I like this thread - I've set up a company but cannot find any of the major banks who will open me an account. Seems very strange that when we are trying to build our economy we are thwarted by the Financial Institutions. I'm going to try Starling Bank any adverse comments? Thanks in advance 

jonesMUFCforever

charlesyates said:

I like this thread - I've set up a company but cannot find any of the major banks who will open me an account. Seems very strange that when we are trying to build our economy we are thwarted by the Financial Institutions. I'm going to try Starling Bank any adverse comments? Thanks in advance 

There has to be a reason why they will not open a business account for you?

Thrugelmir

charlesyates said:

I like this thread - I've set up a company but cannot find any of the major banks who will open me an account. Seems very strange that when we are trying to build our economy we are thwarted by the Financial Institutions. I'm going to try Starling Bank any adverse comments? Thanks in advance 

Busy with other matters at the current time. New accounts isn't high priority. 

Zanderman

I like this thread too - it gets lots of first time posters - I do hope they all get back to us with their subsequent experiences of business banking.

J_B

charlesyates said:

..... I'm going to try Starling Bank any adverse comments? Thanks in advance 

Only adverse comment was getting the business account opened, after that, they are brilliant!