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Bank Accounts for Self Employed

bruncher
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Bank Accounts for Self Employed

#94994

Postby bruncher » November 11th, 2017, 5:42 pm

I made an enquiry with Nationwide about my FlexAccount: Several incoming payments from clients show the account number rather than the name of the payer. This seems to be the case mainly with Nationwide account holders making transfers to me.

Nationwide said that the system is designed to work that way (no reason given) but that I might be in breach of their conditions which prohibit use of the account for business. Very unfriendly response given that I have been a customer for 30+ years.

What constitutes 'business'. If I am self-employed and receive payments, does that mean I need a business account?

I might move the account anyway, as I have had several problems recently and find them increasingly bureaucratic.

I previously had a business account with Santander, but that was for a Limited Company.

gryffron
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Re: Bank Accounts for Self Employed

#95100

Postby gryffron » November 12th, 2017, 11:15 am

bruncher wrote:If I am self-employed and receive payments, does that mean I need a business account?

Legally, no. As long as you can account for the business payments separately to the taxman, they can go through your personal account. That's even true for a Ltd Co, not only for self employed.

However, as far as the Ts&Cs of the bank goes, that's really up to them. Most banks don't care as long as the number of payments is pretty small. But if you start making and receiving a lot of payments, especially cash transactions (which cost the bank a lot to process), then they may well insist you move to a (charged) business account. You can bet they have a "watch" on your account now that you have told them it is being used for business. These days, none of the banks will miss an opportunity to make money from their customers. :(

Gryff

PinkDalek
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Re: Bank Accounts for Self Employed

#95102

Postby PinkDalek » November 12th, 2017, 12:09 pm

gryffron wrote:Legally, no. As long as you can account for the business payments separately to the taxman, they can go through your personal account. That's even true for a Ltd Co, not only for self employed.



I'm not disagreeing with the gist of your post, in so far as the OP is concerned, but there are many potential problems with a Limited company operating through a personal bank account. Not least if there were to be an HMRC enquiry and, in particular, how would one prove dividends have been paid from the Limited company to the shareholder and vice versa?

midnightcatprowl
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Re: Bank Accounts for Self Employed

#95103

Postby midnightcatprowl » November 12th, 2017, 12:16 pm

There are ways of getting 'free' or reduced price business accounts e.g. members of the FSB have access to a free Co-operative Bank business account. I'm just about to finally close my own such account because I'm no longer trading but I've always been very happy with it. The catch is, obviously, that joining this, that or the other business organisation costs and you have to decide if that cost is worth the benefit of the free bank account + any other benefits of membership.

Why not simply get a new personal bank account and use that for business purposes as well? Just don't ever use the word 'business' with the bank! Once you have more than a certain number of business transactions, or if you regularly wanted to pay in lots of cash, the new bank might start asking if you were using it for business purposes I suppose. My bank never asked me but at a certain point I found it easier to completely separate the personal and business transactions but my business generated lots of relatively small transactions on pretty much a daily basis and in the end it did get confusing even if the bank of the time didn't care.

I think you will have the problem of some payments just showing an account number rather than a name whichever bank you use as this probably has more to do with the banks of the people paying you and also the ways in which individuals and businesses set up their payments.

It's no good thinking about concepts such as loyalty when it comes to banking. You might be loyal to your gas engineer because they do a good job and don't tramp mud all over your floors. Your gas engineer might turn out at an inconvenient time to help you because you've been a loyal customer. But loyalty is an empty term when it comes to banks and banking. They have no loyalty to you and you need have no loyalty to them.

bruncher
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Re: Bank Accounts for Self Employed

#95568

Postby bruncher » November 14th, 2017, 11:39 am

Thanks to all for the helpful comments.

financegirl123
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Re: Bank Accounts for Self Employed

#95950

Postby financegirl123 » November 15th, 2017, 2:59 pm

Might be worth getting a business account from the offset - will likely save you time and money in the long run. Although your business income will be taxed alongside your personal tax, it is vital to keep your business records and finances separate from your personal affairs - there's a few accounts targeted at the self-employed that might be of interest like Coconut and Tide


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