Shopping for new bank account rather than using old savings account

olzkiazi

Hey folks.

I own a little cafe, and I pay the VAT quarterly. The way I manage this is every week £500 gets automatically transferred from my Natwest business account into a Natwest Flexible Saver account, and then when the VAT bill is due, once every three months, I transfer the money from the Saver account into my current account, and use my current account debit card to make the payment (there's no additional charge if it's paid with a personal debit card, but there is if using a business debit card). 

I'm thinking there's got to be a better way of managing this, using a new bank account with cashback, or perhaps some kind of cash incentive when the account is opened.

It would be fairly easy to have the £500 a week payments go into the new account from the Natwest business account, and if needs be, I could set up other transfers from the Natwest business account, and pay suppliers from the new account, if the terms of the new account need a certain amounts of payments to come from the account a month. It would make the yearly accounts a little trickier to compile, but if the benefits of the new account are worth it, it's totally do-able.

Just wondering if anyone has any ideas about what kind of account would work well for this, or would perhaps recommend an entirely different kind of account. Thanks in advance for any responses.

Hoenir

Once detected don't be surprised if your relationship with the bank is ended. Clear breach of the terms and conditions of operating a personal bank account. 

Emmia

It looks like you're mixing personal and business money, and breaching normal terms of a personal bank account - I appreciate there are fees with your business debit card but that is the card you should be using to pay HMRC.

The flexible saver is a personal savings account. NatWest also have business savings accounts, branded as business reserve accounts - looking at the interest rate there's not a huge difference

Flexible saver 1.6% balances up to £24,999
Reserve saver 1.46% balances up to £999,999

olzkiazi

Thanks for the replies folks; didn't realise it was a problem using my current account card to pay the VAT. I try to keep my business money separate from my personal money, but if there's a possibility of avoiding a charge, I'll definitely consider it, esp as everything is so much more expensive these days. I'm a sole trader; does that make a difference?

Emmia

olzkiazi said:

Thanks for the replies folks; didn't realise it was a problem using my current account card to pay the VAT. I try to keep my business money separate from my personal money, but if there's a possibility of avoiding a charge, I'll definitely consider it, esp as everything is so much more expensive these days. I'm a sole trader; does that make a difference?

In the T&C's on page 5 "General Terms" it says "Your account is designed to be used in the UK and must not be used for business purposes"

On page 21 it states they may close your account immediately if you've used it for business purposes (last bullet)

https://www.natwest.com/current-accounts/terms-and-conditions.html

As a sole trader, you're operating a business, so no it doesn't make a difference.

olzkiazi

Again, thanks for the replies - I'll start looking at how i can clearly separate my business account from my personal from here on out, and I guess I'll ditch the idea of a new account - thanks and have a lovely weekend. 

olzkiazi

Just for further clarification... if I transfer money from my current account into my business bank account, does it then become technically business money, and cannot be transferred back into my current account... and how does my monthly salary work, in that I shouldn't be transferring that into my current account, as it's technically business money? 

Emmia

olzkiazi said:

Just for further clarification... if I transfer money from my current account into my business bank account, does it then become technically business money, and cannot be transferred back into my current account... and how does my monthly salary work, in that I shouldn't be transferring that into my current account, as it's technically business money? 

You're paying yourself a salary which is a business expense - so you can move the money like that. 

The money for your business i.e. the money you get for teas and coffees, cake etc. should be going into your business account directly. Why are you moving money backwards and forwards between your accounts - this must make doing the accounting a nightmare.

olzkiazi

Emmia said:

olzkiazi said:

Just for further clarification... if I transfer money from my current account into my business bank account, does it then become technically business money, and cannot be transferred back into my current account... and how does my monthly salary work, in that I shouldn't be transferring that into my current account, as it's technically business money? 

You're paying yourself a salary which is a business expense - so you can move the money like that. 

The money for your business i.e. the money you get for teas and coffees, cake etc. should be going into your business account directly. Why are you moving money backwards and forwards between your accounts - this must make doing the accounting a nightmare.

Thanks for the info re: the salary - that makes clear sense to me. 

Times when I've transferred from my current account to my business are few and far between but, for example, on one occasion my family gifted me a chunk of cash after they had sold some of the land on their farm, which I am a shareholder of. I wanted to use some of that money to buy two new fridges for the shop, and I wanted those purchases to come out of the business bank account, so that they would appear on the business bank account statements, which is what I use as a starting point for doing my accounts. So I transferred the amount from my current account to my business account, and used that money to buy the fridges. 

The automatic weekly transfer from the business account into my savings account was actually a suggestion from my accountant, but maybe they didn't realise it wasn't a business savings account. They suggested it, so that I could make sure that at the end of three months I had the money for the VAT payment saved up and ready to go to.

The accounting isn't actually too bad, as I have the business bank account, that all of the business expenses come out of, and all the income from the shop gets paid into. 

SacredStephan

olzkiazi said:

Thanks for the replies folks; didn't realise it was a problem using my current account card to pay the VAT. I try to keep my business money separate from my personal money, but if there's a possibility of avoiding a charge, I'll definitely consider it, esp as everything is so much more expensive these days. I'm a sole trader; does that make a difference?

I'm a VAT registered sole-trader and I pay my VAT quarterly to HMRC by bank transfer from my business account. There is no charge for this.

HillStreetBlues

Question: Can the business lend the money to OP? OP puts lent money in personal savings account, when VAT is due OP repays the money.