How to receive payment as self-employed Tutor?

Siarad

After being made redundant from a small school that is closing, I am starting up as an individual tutor.

I was anxious about giving out my main current account details to clients for payment, so rang Nationwide to ask about setting up a second current account only to be told that they don't allow business through current accounts and would penalise me if they found out I was doing that.

PayPal seem to charge both me and the client extra money to receive payment through them.

It seems a lot of lost money to have a dedicated business account and all associated charges for a 'business' that is likely to bring in at most £300 a month while I'm starting.

Can anyone advise a means of payment that doesn't completely wipe out income when operating a very small, individual 'business' like mine?

MyRealNameToo

Siarad said:

After being made redundant from a small school that is closing, I am starting up as an individual tutor.

I was anxious about giving out my main current account details to clients for payment, so rang Nationwide to ask about setting up a second current account only to be told that they don't allow business through current accounts and would penalise me if they found out I was doing that.

PayPal seem to charge both me and the client extra money to receive payment through them.

It seems a lot of lost money to have a dedicated business account and all associated charges for a 'business' that is likely to bring in at most £300 a month while I'm starting.

Can anyone advise a means of payment that doesn't completely wipe out income when operating a very small, individual 'business' like mine?

1) Get a "free" business account, most banks offer one for 1-2 years then start charging fees, some have no standing fees but have fees on certain transaction types. Starling is currently free, it may require you to have a personal account too but thats also free so who cares. Alternatively HSBC has now waived their monthly fee on my account (it was free before, then they introduced fees, then they waived them again). 

If you are going to be getting paid in cash then many banks charge businesses for handling cash which is one of the long list of reasons why businesses often prefer card payments and many are cards only. 

This is all ok but you will be giving people your account number and sort code 

2) You could also take card payments, Zettle, Square, SumUp all have no standing charges but they will take circa 2% of your fees as their commission. Most you can do it with no other hardware as long as your phone is sufficiently modern or you can buy a card reader which is normally sub £50. 

With or without a reader the system will only work if your phone has an internet connection so if your customers live in the middle of nowhere this may not work for you. 

jaybeetoo

We have used Starling for years first as a sole trader and then as a limited company.  All free. Highly recommended.

martindow

I don't think there is any reason to be fearful of giving out your sort code and account number to receive bank transfer payments.  In the past we gave this information freely on cheques along with our signature.  You obviously need a business account though.

But I think taking card payments would be better for you.  Most people would prefer to pay this way and are very comfortable using contactless readers.  You will pay a couple of percent, but it will save you having to chase up bank tranfers or PayPal payments where customers sometimes 'forget' or are slow to pay for any reason.  

If anyone is not comfortable using contactless, you still have the option of accepting PayPal or a bank transfer if you wanted to do that.  PP if you used it would not charge the sender, just you receiving the payment.

Savvy_Sue

The thought of having a separate account is a good one: much easier to see from the start what's going in, and if you only ever transfer money to another account and have no overdraft, I wouldn't see a problem in giving account details to clients. 

Altior

It's best practice to keep your business completely separated from your personal accounts.

If you use online accounting software such as Xero, they have online invoicing where your customers can click a link to pay the invoice online via a payment service. If you use Stripe you have the option of including surcharging where the customer is charged most of the transaction processing fees as well.

MyRealNameToo

Altior said:

 If you use Stripe you have the option of including surcharging where the customer is charged most of the transaction processing fees as well.

Which would be illegal in the UK for consumers, you can only add surcharging to business and corporate cards

SensibleSarah

Another vote for Starling. I have used their free business account ever since becoming a full time freelancer in 2021 - You also don't need a current account with them to open a business account. 

Mistral001

Siarad said:

After being made redundant from a small school that is closing, I am starting up as an individual tutor.

I was anxious about giving out my main current account details to clients for payment, so rang Nationwide to ask about setting up a second current account only to be told that they don't allow business through current accounts and would penalise me if they found out I was doing that.

PayPal seem to charge both me and the client extra money to receive payment through them.

It seems a lot of lost money to have a dedicated business account and all associated charges for a 'business' that is likely to bring in at most £300 a month while I'm starting.

Can anyone advise a means of payment that doesn't completely wipe out income when operating a very small, individual 'business' like mine?

I pay quite a lot through Paypal and I have never been charged a fee once. I have a Paypal account, but even if you are a non-account holder of Paypal (a guest) you still do not get charged a fee

BTW, you did not mention cash.  As long as you record all cash payments and include them in your end of the year accounts, it is a totally acceptable way of accepting payments.  

MyRealNameToo

Mistral001 said:
BTW, you did not mention cash.  As long as you record all cash payments and include them in your end of the year accounts, it is a totally acceptable way of accepting payments.  

Though some customers may not like this/ find it inconvenient etc so you may be limited if this is your sole payment method accepted. 

Mistral001

MyRealNameToo said:

Mistral001 said:
BTW, you did not mention cash.  As long as you record all cash payments and include them in your end of the year accounts, it is a totally acceptable way of accepting payments.  

Though some customers may not like this/ find it inconvenient etc so you may be limited if this is your sole payment method accepted. 

I was not suggesting that it would be your sole payment method. 

A general point I would make is that, unless you are a very big business, you should try to be as flexible as possible with the way people want to pay.  Some customers will take umbrage at you refusing to take their hard-earned money in a way that is acceptable for many other small businesses.