Paying for business banking - am I being a tight wad?!

J_B

jonesMUFCforever said:

J_B said:

Just open a personal account with Starling - you can call it Director's Loan Account

IMO the OP has a limited company - you cannot open a personal account for limited company funds.

But, for directors loan account?

Thrugelmir

J_B said:

jonesMUFCforever said:

J_B said:

Just open a personal account with Starling - you can call it Director's Loan Account

IMO the OP has a limited company - you cannot open a personal account for limited company funds.

But, for directors loan account?

Still a taxable benefit in kind. Assuming you are both a director and shareholder.  

penners324

Surely the tax liability account in Xero tells you how much tax you owe? So ensure you reconcile the tax liability account in Xero against the tax pot in Starling 

oz0707

Is the alder more savings account not a fee free option you could use? I use it to store cash as HSBC doesn't pay interest and this used to pay 1%. Fee free as far as i'm aware

Jumblebumble

eludlow said:

I run my all small IT consultancy business, a limited company with my my wife and I as Directors.  My current account is with Starling, and I am super impressed with them and the service they give.  For various reasons, I like to have a separate account that I transfer some cash to each month to cover the tax bill.  Ideally I'd have a second Starling account, but they only let you have one per business.  I could create a "pot" as they call it, but it would all show as the same account in Xero (super impressed with that, too!).  I opened an HBSC business account at the back end of last year, taking advantage of their "free for a year" business banking.  That trial period is coming to an end soon, and I don't really want to pay them £5.50 per month hold my money that earns next to nothing!

I've looked at other accounts (great comparison from MSE, thanks!) and the Aldermore looks like it's paying the best interest rate.  It won't however link to Xero, which isn't a deal breaker, but would be nice.  There are other free business accounts, and also a few that are offering a year's free (or similar).  I'd be quite happy to just move around between these, transferring the funds the at the end of the trial period.  But a bit of me thinks this is somehow...wrong?  Am I being silly?  Would be interested in the views of others.

I am super cautious and having had experience of HSBC locking our Business bank account owing to post going missing and then insisting on both my self and my fellow director participating in the unlocking process despite both of us having an either OR mandate to operate the account, and him being abroad for several weeks
We therefore have 2 bank accounts  (fortunately one is a Santander legacy free account)
It would in my view be the height of stupidity to allow money to be paid into a locked account and not to be be able to pay the bills, and I happily  pay the £70 a year to avoid this possibility

Pennywise

On a slightly different vein, there are sometimes other good reasons for having "proper" business accounts with a more established bank.  A lot of small businesses have found themselves unable to access the bounce back loans because (a) they didn't have a business bank account and used a personal account instead, or (b) they used one of the new challenger banks who weren't participating in the BBL scheme.  I've long recommended to clients that they have 2 business bank accounts with different banks "just in case" - that advise has borne fruit for many of my clients who managed to secure BBL loans with one of their bank accounts when the other either refused them or wasn't participating. 
Another advantage of having a "traditional" bank as well as a "challenger"/online bank is that sometimes a business gets a cheque, such as a tax refund or from a customer, and that does pose issues where they are using a bank that doesn't accept cheques!
As others have said, often an hour's work brings in more funds than a year's bank charges, so trying to do business banking on the cheap could end up "pennywise and pound foolish"!  

martindow

Jumblebumble said:

I am super cautious and having had experience of HSBC locking our Business bank account owing to post going missing and then insisting on both my self and my fellow director participating in the unlocking process despite both of us having an either OR mandate to operate the account, and him being abroad for several weeks
We therefore have 2 bank accounts  (fortunately one is a Santander legacy free account)
It would in my view be the height of stupidity to allow money to be paid into a locked account and not to be be able to pay the bills, and I happily  pay the £70 a year to avoid this possibility

Would that protect you though?  I would imagine that if an account was frozen because of a suspicion of illegality of some kind, the bank would inform others and any accounts linked to the people involved would also be frozen.

Having said that I have several acconts - personal and business - but this has more to do with losing a card and being unable to make purchases or get cash tnan anything else.

Selinda

I just opened an account with TIDE bank. Not sure about free but for my relatively low number of transactions it was perfect and pretty much free. My personal account is with Barclays and they were charging £6 per month for a business account so this was a saving for me at least. I used an offer code I found online when joining (FREE50) which gave me £50 cash added to my balance, free transfers and free LTD company setup. So far - I've had zero issues and the account/app is much better than what I've had in the past. They do offer free accounting software integration but my business is very new so not looked at that or expect to need it anytime soon. :-)