Is business account a legal requirement?

Eldrax

Only just saw your message noitsnotme, in which case replace 'company' for 'business' above

noitsnotme

So as it's not a company, he can call himself anything he wants and could technically change that every 5 minutes or have several names all at once.  The important thing is that the legal entity is him personally, no matter what business name he is using.

'xxx Property Maintenance' and 'xxx Pointing Specialists' and 'Mr xxx' are all the same thing legally so it makes no real difference if he asks you to pay in to what looks like his personal account.  It might actually be a business account just in his name.

Eldrax

Thank you noitsnotme, that's very helpful. 

Mistral001

Eldrax said:

This question is for two reasons, same question though as above - is a business legally required to have a separate account? If it isn't, then why might one choose not do so and instead have a second personal account where you carry out business transactions?

This is for myself, to consider for my own business (hopefully in near future) but also because I hired a contractor for work on house and they want payment to bank account in their name, rather than the business name - seems dodgy?

Absolutely not dodgy for a business to be run from a personal account if it is a sole trader business.   The income into that account is just as tracible as that into a business account.  In fact since the account is in the name of a person, it could be argued that it is more tracible by the authorities as there are various techniques that can be used to hide identities by using a business account.   

PS:  If he had asked for cash, then that would be a bit dodgy.

jonesMUFCforever

Mistral001 said:

Eldrax said:

This question is for two reasons, same question though as above - is a business legally required to have a separate account? If it isn't, then why might one choose not do so and instead have a second personal account where you carry out business transactions?

This is for myself, to consider for my own business (hopefully in near future) but also because I hired a contractor for work on house and they want payment to bank account in their name, rather than the business name - seems dodgy?

Absolutely not dodgy for a business to be run from a personal account if it is a sole trader business.   The income into that account is just as tracible as that into a business account.  In fact since the account is in the name of a person, it could be argued that it is more tracible by the authorities as there are various techniques that can be used to hide identities by using a business account.   

PS:  If he had asked for cash, then that would be a bit dodgy.

What about the bit in the terms of your personal account that says you cannot use it for business purposes?

Sandtree

Mistral001 said:
In fact since the account is in the name of a person, it could be argued that it is more tracible by the authorities as there are various techniques that can be used to hide identities by using a business account.   

A bank account has to be in the name of the legal entity. As the OP has stated the trades person is a sole trader then he is the legal entity. A business account can normally also be setup to allow cheques etc (if anyone remembers them) to be made payable to their trading style and cashed into the account.

Business accounts with UK banks is not a way to hide identities... shell companies, corporate shareholders across different legal jurisdictions are all ways to make it difficult to trace true beneficiaries but a lot of time/effort for your average chippy to do.

jonesMUFCforever said:
What about the bit in the terms of your personal account that says you cannot use it for business purposes?

In many cases I think it is more an issue of ignorance than them being untrustworthy from a consumer's perspective. The banks also don't help themselves given they so rarely police the matter.

Mistral001

jonesMUFCforever said:

Mistral001 said:

Eldrax said:

This question is for two reasons, same question though as above - is a business legally required to have a separate account? If it isn't, then why might one choose not do so and instead have a second personal account where you carry out business transactions?

This is for myself, to consider for my own business (hopefully in near future) but also because I hired a contractor for work on house and they want payment to bank account in their name, rather than the business name - seems dodgy?

Absolutely not dodgy for a business to be run from a personal account if it is a sole trader business.   The income into that account is just as tracible as that into a business account.  In fact since the account is in the name of a person, it could be argued that it is more tracible by the authorities as there are various techniques that can be used to hide identities by using a business account.   

PS:  If he had asked for cash, then that would be a bit dodgy.

What about the bit in the terms of your personal account that says you cannot use it for business purposes?

If there are not many business transactions, then many banks will allow you to use your personal account for business purposes despite what their terms and conditions say.  I have been using mine for over 23 years for business purposes and my bank knows that I am a sole trader with my only stream of income coming from my own business. 

You are unlikely to be able to open a personal account if your sole trader business is your only form of income, but most people when they start a sole trader business have already got a personal account..