Hi guys,

 

I'm starting up as freelance and definitely want to have a seperate bank account for all business transactions. Is it necessary for this seperate account to be a 'Business Account' or would a standard current account do?

 

I'm with Lloyds (won't necessarily be opening the second account with them though) and they offer a free business account for 18 months, but after that the fees seem like they'd add up pretty quickly. What are the benefits of having a 'Business Account'? Are they worth the expense?

 

Also, if anyone could recommend a specific account/bank that'd be great.

 

Would appreciate any opinions or advice.

 

Many thanks

Rachel

In some respects yes! It is necessary! Especially if you're a LTD/LLP. For tax ect. It makes things ALOT easier. Much much much less fuss when it comes to dealing with National Insurance, Income Tax and all the other stuff Her Majesties Revenue & Customs like to badger us for. Assuming that is that you've registered But I used to use my own bank account and that worked out just fine!

 

I'm with NatWest and that's a pretty good bank. Most of the time however, the expense isn't worth it.

 

Regards,

B.

I was going to get one, but instead I have it in my personal bank account. 100% of the money that I make is for personal use and isn't going to be invested into the company as yet, because it's not necessary, therefore a business banking account is a waste of time.

 

A bit of advice, most banks will charge you for their services. Abbey National offers free business banking, and was recommended by a very good financial advisor.

A separate account is definitely a good idea as it makes things much simpler when it comes to filling out your tax return but as has already been said, it doesn't have to be a business account.

Having said that, why not try out one of the 18 months free banking deals? You can always close/change the account when the free period is up.

I'm with Lloyds and they seem pretty good. Also, when you're on the free banking deal, you get a run down of what the charges would have been had you had to pay them.

Traxor... I hope you are paying your 20% income tax, and NI payments and have registered as self employed.

 

Having a bank account under your business name is a lot more professional than having cheques made out to your name, which brings me on to another point. Banks dont normally care about your account unless your paying in too many cheques which costs the bank money. also having a seperate bank account will make it a lot easier to show profit and loss, seperating out all business expenses etc. basically i think its essential! I cant imagin trying to seperate all my personal expenses from business ones, and it will take an accountant (year end) ages and cost more to sort out.

Thanks so much for your input, I really appreciate you all taking the time out to help

 

Just to clarify:

 

I cant imagin trying to seperate all my personal expenses from business ones, and it will take an accountant (year end) ages and cost more to sort out.

I am definitely getting a separate account, just not sure whether to go for a specific 'Business Account' with all the bells and whistles, or just a standard current account (which can be in my name or business name, 'XXXX t/a XXXX etc'), sorry for any confusion there!

 

Thanks,

Rachel.

I have a business account with free 18 months business banking. When that is up i'll just move to another bank with their free 18 months etc.

 

Looks a lot more professional asking clients to put your company name on cheques rather than your own name.

Traxor... I hope you are paying your 20% income tax, and NI payments and have registered as self employed.

 

Having a bank account under your business name is a lot more professional than having cheques made out to your name, which brings me on to another point. Banks dont normally care about your account unless your paying in too many cheques which costs the bank money. also having a seperate bank account will make it a lot easier to show profit and loss, seperating out all business expenses etc. basically i think its essential! I cant imagin trying to seperate all my personal expenses from business ones, and it will take an accountant (year end) ages and cost more to sort out.

I wouldn't be on here or in the public eye if I wasn't abiding by the law, it's just that in my opinion, until I'm earning much more money from this profession, there's no need for me to have a business bank account, I'm very good with money anyway and have a very good system for accounting things etc , so everything is in order and absolutely fine.

 

As for professionalism, I'm going to worry about that at a later date, most clients pay me direct debit anyway, I've only had two people pay by cheque.

 

As I said previously, there's no point paying for business banking when Abbey does it for free. They're a very very good bank, they have some limits, for example no more than 100 cheques a month, otherwise it's 50p per cheque etc. Have a look online, I was going to apply, but like I previously said... There's no point for me until I'm earning enough money, I have afterall only just became self-employed (September 08).

 

Just going to put this in bold... Abbey is free for life business banking, so try them.

all banks offer free business banking from 18 - 24 months, you may need to haggle a little. a litle word of warning though, RBS dont offer a debit card they only offer a sort of credit card - beware of these!

 

I havent noticed any bells and whistles of having a business account, only that my statements come with holes pre punched for filing.. oh and you have to pay for new ones if you lose them - not like personal banking where its free

all banks offer free business banking from 18 - 24 months, you may need to haggle a little. a litle word of warning though, RBS dont offer a debit card they only offer a sort of credit card - beware of these!

 

I havent noticed any bells and whistles of having a business account, only that my statements come with holes pre punched for filing.. oh and you have to pay for new ones if you lose them - not like personal banking where its free

 

Most banks won't offer sole traders or partnerships a card in their first year of trading.

 

I have free business banking with Halifax along with free online banking so there are no charges for statements. I find Halifax to be very useful. I don't know about other banks but Halifax send me special envelopes for cheques and cash and I don't even have to go into the bank, I can just drop it into a box outside.

 

None of that contributed to my decision for business banking. It's just a lot more professional if you are going to be trading under any name but your own.

I have a business account with free 18 months business banking. When that is up i'll just move to another bank with their free 18 months etc.

 

Looks a lot more professional asking clients to put your company name on cheques rather than your own name.

I never thought of that, that's a good idea.

My free banking period is about to come to an end so I think I'll get looking for a new offer!

I've got an HSBC Business Account and it's an online doo-dah so if I don't want anything printed-off or pay-in cheques (which I never have and never will) then it's free. I did cancel my Business credit card after the 18 month introductory offer as they were going to start charging but I don't need a credit card so it was nay bother.

So, that was another piece of advice - maybe look for online (or 'eco' if they're being tree-huggers) accounts.

I have a business banking account with Abbey, free for life, none of this 18 month free malarky. It's a little bit strange as you can only pay cheques in using their cash points or you can send them through the post using their pre-paid envelopes. Basically, the branches won't deal with you... I actually prefer this way of banking, I can do it all online and make payments and deposits without speaking to anybody

I have a business banking account with Abbey, free for life, none of this 18 month free malarky. It's a little bit strange as you can only pay cheques in using their cash points or you can send them through the post using their pre-paid envelopes. Basically, the branches won't deal with you... I actually prefer this way of banking, I can do it all online and make payments and deposits without speaking to anybody

+1

I have a business banking account with Abbey, free for life, none of this 18 month free malarky. It's a little bit strange as you can only pay cheques in using their cash points or you can send them through the post using their pre-paid envelopes. Basically, the branches won't deal with you... I actually prefer this way of banking, I can do it all online and make payments and deposits without speaking to anybody

I'll have to look into this as my free 18 month period is just about coming to an end with HSBC.

 

Sounds like just the ticket.

Were curerntly with Abbey and have a great service with them, however if you are going to need to use Direct Debits then you will need an account with the big boys like HSBC etc because Abbey is a bit behind with their business banking.

Were curerntly with Abbey and have a great service with them, however if you are going to need to use Direct Debits then you will need an account with the big boys like HSBC etc because Abbey is a bit behind with their business banking.

Ah right. Yeah that could be a problem.

 

I have my magazine subscriptions and a few other direct debits coming outta my business account.

I opened a business bank account for the 2 main reasons already mentioned, easier to manage finances and it looks more professional.

 

Having said that, I'm sure I read somewhere that "technically" it is fraud or can be viewed as money laundering if you use a personal account for business. This is for obvious reasons. I know some people pay several cheques into their personal account every week and the banks don't seem to care. I think it is only deemed as money laundering/fraud in extreme cases. Just to stress - I'm not 100% sure on this but could be worth looking in to just to be sure.

I have my magazine subscriptions and a few other direct debits coming outta my business account.

 

Are they for business use? i considered doing the same, but didnt want to have to recalculate it all at the end to take off things that were blatenly for personal use.

 

II'm sure I read somewhere that "technically" it is fraud or can be viewed as money laundering if you use a personal account for business.

 

I highly doubt this, when i went into a bank saying i was starting my own sole trader company, and i needed an account to handle all the income and expenses involved, they recommended a personal account, saying it was more likely to suit my needs.

 

Reaper

Thanks to all replier here it's really great thread

Are they for business use? i considered doing the same, but didnt want to have to recalculate it all at the end to take off things that were blatenly for personal use.

 

Yeah they're web design mags, .net etc.

Fair enough, im still trying to decide if my mobile is a business expense, as i use it mainly for business purposes, but i suppose 1 text to a friend would invalidate all of that.....

I use my mobile phone as a business expense, because it is. The same as me paying my parents money because I'm using a room as an office in their house, that's a business expense.

If you're a sole trader it's not mandatory to have a business bank account, but it makes life easier in case you get investigated by HMRC or whatever rather than trying to work out what transactions on your personal bank account statements are personal or business related.

 

Also, although it's not illegal to use a personal account for business, you will be violating the bank's terms and conditions (as you don't pay fees on personal accounts for deposits/withdrawls etc. like you do with most business accounts) and so they have the right to close your account if they suspect you of using it for business purposes.

 

If you want to avoid paying fees for a business account, there are a couple of options I know of:

 

- be a member of the FSB and get free banking for life through the Co-Op

- get a business current account with Alliance & Leicester and not pay any fees as long as you deposit at least £1000 a month.