business account or own personal

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D Brennan

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Just a quick question, just been reading the business page and it says not to use your own account...whats the reason for this??

 

jckent

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the taxman gets a little twichy about combined finances,

you have to be able to prove what is business and what is personal.

I'm sure others will add to this

 

D Brennan

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the taxman gets a little twichy about combined finances, you have to be able to prove what is business and what is personal.

I'm sure others will add to this
ye thats what i was thinking, but was unsure.

 
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As JcKent says keeping things separate and easily identifiable is undoubtedly a biggie!!

The Big negative is the Bank Charges..

Banks have a tendency to charge business customers higher costs than personal banking customers..

(even if physically you are one and the same as a sole trader!)

But depending upon the size of your business & your own personal financial situation.. you may need to be arranging business loans / overdraft facilities etc.. in which case the bank would probably be more reluctant to start offering these business type finance arrangements to a personal customer.

There are still various wholesalers / supplier who deal with "Trade only"..

and may require evidence of a business bank account to confirm you are a trading business.

Again some suppliers offer trade credit accounts.. collect goods with purchase order number payment following invoice 30day / 60day terms,

Some trade accounts are only permitted after you can show you have been trading for a certain No. of months .... (again a business account statement can be used as evidence).

Some of your regular business expenses can be set up via direct debit...

e.g. advertising / Part p scheme fees / NI contributions / Business mobile phone account etc.. again easier kept separate from personal finance DD's.

Generally Banks are happy to offer a bit of help to new start business..

e.g. zero charges 1st year, 33% charges 2nd yr, 66% charges 3rd yr,

full charges 4th year & onwards... (or similar type thing.)

There are often some useful free booklets about controlling your business costs / VAT / Insurance etc.. etc.. (Well I was given some anyway! :| )

Once your business is up and established...

raising extra finance at a later date can be far easier if you have had a reasonably healthy business bank account running...

& the bank has a pretty fair idea o your turnover just by looking at how much has been paid in over the past 12mnths!

whereas you personal account......

may be a joint account.. with other stuff going in as well!!

Thats a few thought for starters! :) ;)

 
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BTW..NI contributions and Income TAX are not a business expense.
Indeed so Noz!Applaud Smiley

was just listing those sort of extra outgoings that probably did not existing prior to self employment...

my NI comes out of my business acc..

cuz it just helps me keep track of costs that are related to my work / employment status!

as opposed to the "olden days" when employed & Mr employer did deductions before I saw them! :p :(

Guiness Drink

 
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Thought I`d better jump in here, as I wrote the info.....

We`ve recommended a seperate a/c for a number of reasons:

1. We`ve found, with friends who`ve gone s/e, who`ve just used the one account - when they`re paid for a job, they go shopping & pay bills. If they haven`t been paid / cheque hasn`t cleared - they don`t! NONE of them is still trading. They were good at their jobs, and ALWAYS busy; but cashflow was the thing that sunk them!

2. Yes, some banks will charge for a business a/c. Shop around, and you`ll find some who do not charge at all, as long as you are not overdrawn. Bank charges are tax deductible. (running cost - not bounced cheques etc...!)

3. It is simply easier to see how your business is doing, financially, if the payments go to a different place than your household stuff. Imagine going through your bank statement every month, with maybe 150 transactions on it. You would have to highlight EVERY payment which was credited/debited for your business, and then add those figures up seperately. If you can afford the time to be doing that, you`re daft!

4. As I believe I said on the business page, Once you`ve got your wage(s) worked out, and all your fuel / tax / NI etc are set up on the a/c; you can see AT A GLANCE, exactly how much money you need to bring in per week.

Does that help?

KME

 

extension15

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Banks will get wise if you use a personal account, for business, in particular the number of transactions on the account..

(After all, you are avoiding charges.. :D )

;)

 
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Banks will get wise if you use a personal account, for business, in particular the number of transactions on the account..(After all, you are avoiding charges.. :D )

;)
A guy I know who did painting & decorating...

(in fact I think he still does!)

was requested to attend a meeting about his personal account...

because it appeared to have an excessive number of business type transactions!! :eek: :O:O:O

they wanted to charge him...

so he moved banks!! :eek: :^O:D:)

 
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At work our account was accidentally set up as a personal account - so no charges. They realised and complained, said they would start charging. We said we'd go elsewhere and opened another acount just incase. They relented so we now have a business account with no charges

Think Northern Rock needs all the cutomers it can get :D

 
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At work our account was accidentally set up as a personal account - so no charges. They realised and complained, said they would start charging. We said we'd go elsewhere and opened another acount just incase. They relented so we now have a business account with no chargesThink Northern Rock needs all the cutomers it can get :D
accidenta... bloomin...lly!!

phtt!

:eek: :^O:^O:^O:^O:^O:^O:^OApplaud SmileyApplaud SmileyApplaud SmileyApplaud SmileyApplaud Smiley

 

extension15

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A guy I know who did painting & decorating...(in fact I think he still does!)

was requested to attend a meeting about his personal account...

because it appeared to have an excessive number of business type transactions!! :eek: :O:O:O

they wanted to charge him...

so he moved banks!! :eek: :^O:D:)
But how do you (the banks) define a business transaction?

:D

 

extension15

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Number of small payments coming in regularly? Most people get 1 main payment and other transactions tend to be out.........
That's probably why the bank wants to see me...

:^O

:_|

 

Pyro

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As noted, most banks charge businesses. Two that do not charge businesses are Abbey and Co-Op.

I have had an Abbey business account since 2001, always in credit, and no problems at all with/from the bank.

Having recently joined the Federation of Small Businesses, the Co-Op bank was recommended as the FSB have an arrangement with Co-Op. For me it is not particularly relevant, but for anyone wanting a choice of no-fee banking, it provides an option. Contact the FSB or Co-Op bank for further info.

Other advantages of having separate accounts is that non-domestic clients in particular feel that they are dealing with a more professional business if they have to make payments to a business name, e.g. "ABC Electrical" or "J Bloggs T/A ABC Electrical". Businesses making payments to "J Bloggs" seem to have suspicions that Mr Bloggs may not be the professional that he makes out he is and can try to negotiate down or just not take him seriously. VAT registration is another step up the ladder of professionalism as far as non-domestic clients are concerned - they get an immediate impression of a larger and more established electrical business (even though it may only consist of Mr Bloggs).

Pyro.

 
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As noted, most banks charge businesses. Two that do not charge businesses are Abbey and Co-Op.I have had an Abbey business account since 2001, always in credit, and no problems at all with/from the bank.

Having recently joined the Federation of Small Businesses, the Co-Op bank was recommended as the FSB have an arrangement with Co-Op. For me it is not particularly relevant, but for anyone wanting a choice of no-fee banking, it provides an option. Contact the FSB or Co-Op bank for further info.

Other advantages of having separate accounts is that non-domestic clients in particular feel that they are dealing with a more professional business if they have to make payments to a business name, e.g. "ABC Electrical" or "J Bloggs T/A ABC Electrical". Businesses making payments to "J Bloggs" seem to have suspicions that Mr Bloggs may not be the professional that he makes out he is and can try to negotiate down or just not take him seriously. VAT registration is another step up the ladder of professionalism as far as non-domestic clients are concerned - they get an immediate impression of a larger and more established electrical business (even though it may only consist of Mr Bloggs).

Pyro.
would concur with that Pyro!:DApplaud Smiley:)

 

sparkyrj

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HSBC also have free internet business acount that i have used for last two years that has been good so far.

 

mcgaw81

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I recently set up self-employed, and couldn't get a business account, lets just say i enjoyed my youth too much and run up a wee bit of debt :_| , Anyway got all that paid.

Went to try and open a business account and no-one would, so i use a personnel current account, different from my usual one that i have,

However because they wouldn't give me a business account i didn't get the

 
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