So I have money to bank (thankfully mostly cash) but actually finding the right bank to take my money is proving difficult!
I've read in several places and I've been told by several people to get an ordinary account, not a business account. At the same time I've been hearing about people who use non-business accounts getting their accounts closed down because the banks don't like large amounts of cash or numbers of cheques being paid in. I've been looking into the business accounts that the banks offer and they've got really fair and decent charges... if you're earning £500,000 or more!
I'm a sole trader, so no complex wage arrangements, no big corporate clients, just me working for private customers. Seems unfair to be paying a fortune for paying my money in; do I just have to grin and bear bank charges?
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In a word, yes!
Personally I wouldn't want to run through a private account for the reason you mention, plus it doesn't look professional to the customer. You need to kjeep business finance separate for transparency in your accounts, and I would fear a red flag to the Inland Revenue if using a private account.
My Natwest business account is about a tenner a month, so not the end of the world. I would say that cash is very expensive to pay in, with cheques cheaper unless they're very small value, and electronic transfer cheapest of all. You'd be surprised how often the regulars would prefer to pay electronically when you suggest it.
One thing to help keep the costs down is to pay in less often. I only have two people currently who pay by cheque, and they both get invoiced every two months. I've explained why, but they prefer cheque to transfer so this at least halves the cost of paying in.
Ben, you will find it breaks the Banks T&Cs running business money (whether ST or Ltd) through a personal account and they have a right to charge even more fees or close your account(s). If you have a business bank account forcibly closed, it will red flag you in the future as a 'suspect' risk.
All the big banks have this buried in the small print, no matter what others have said on previous threads.
You also subject yourself to greater scrutiny if HMRC tag you for a check or worse, inspection.
Most business bank accounts have multiple tariffs - the dearest for handling lots of cash (ie retailers) to lower costs for businesses who transact electronically.
Ironically, I reckon there is something is about to be 'played out' (end of 2014) in the market place as Barclays have just last week revised its business banking tariffs increasing cash handling account tariffs by over 100%. I would expect to see a flurry of activity as others look to realign their offers.
The FSB or CoOp Business Banking gets a good review for charges etc, but I am not sure how recent issues at the bank will affect it.
best way to bank cash for free is to pay into personal account, then transfer it to business account
ive been doing it that for years lloyds bank manager told me to do it that way when i used them.
tell me where the tax man says you have to use a buisness account unless you get inspected he will never see your bank account, yes it makes a bit of extra work accounting for every transaction, but if you can get away with it.....
i ran through natonwide current a/c for 4 years only changed because turnover grew and i had a fall out over savings
I have been with nationwide, lloydstsb,halifax bank of scotland before lloyds took em over but so far santander have been the best for charges totally free for last 4 years
I run mine through my personal account. My business name is Chris Jackson Landscapes so I don't think it looks particularly unprofessional asking for cheques to be payable to C. Jackson. I'm a sole trader so I don't have huge numbers of transactions. I only really have smaller maintenance clients that pay cash so it's only small amounts, and so we generally don't bother banking it, there's no point paying it in only to have to get money back out of the cashpoint, (I do write duplicate invoices for everyone though, so that I have some traceability for my accounts, it's not pocketed and forgotten). The bank have never had any issue with the number of cheques that I pay in and I am increasingly getting clients paying by internet banking now.
This subject spins around every year. It's a bit like Pesticide licenses et al. The rules are their - you either play by them of you don't.
HMRC strongly recommends you do have separate accounts, although not a legal requirement. The article linked to at the end explains why it such a good idea.
Regarding using a personal account for 'business', my normal barclay's current account states - see section b:
Lloyds is the same for personal accounts:
2.6 This agreement only covers banking services we provide for your personal use. We have different agreements if you are a customer for the purposes of a business, club, charity or other organisation, or if you are acting as a trustee, personal representative, partner or sole trader. This agreement does not affect or change the terms (express or implied) of those agreements.
Now, whether you can 'hide' running a business from personal account is another issue, if you do they may well be able to back charge transaction costs; I repeat, you do not want to have a bank close an account. It's a bit like a bad debt etc on your record.
I can only suggest you check in person with your own bank to get the full facts for you own situation.
Finally some good advice on separating personal and business banking records
More sense here than a morning with the banks. Thank you everyone for the advice. Things are a lot clearer tonight.
In a word no, I had to close my business account after a heap of crap service that was costing £20-30 a month and have been using a personal account for a couple of years now. I have one for business use and another for personal stuff, never had a problem paying in stacks of cheques.
I didnt have any choice really, when i moved house the bank would not stop sending my statements to my old address even after 6 months of calls, visits to bank, emails etc. In the end it was easier to close the damn thing.
im with gary on this. There are advantages to a business account and if you shop around you can find some good deals and good service. AT the end of the day you're running a business and no matter what you think of the banks they are providing a service, which they are entitled to charge a fee for and they don't like it if you try to pull a flanker on them.
The fees are a claimable expense on the accounts and putting it into perspective its no different to any other business overhead, which you just need to take account of in your charge out rates
I would be very careful about banking cash. And about talking about it on open forums!
Everything needs to go through a business account IMO. Anecdotaly, IR inspectors look for exactly that sort of thing and it flags you up.
I stopped taking cash years ago. Partly because it's expensive to bank, but it also avoids the temptation to spend it before it's banked.
One other thing to consider is if you need a mortgage. I can check, but I think it would be an issue with the new regs if you can't provide business statements.
As mentioned previously, it's all tax deductible anyway, so does it really matter?
Sorry Chris, that wasn't a reply specific to you, I just pressed the wrong reply button. Doh!
Chris Jackson said:
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