Small Business Bank Accounts Discussion Area

A question about : Small Business Bank Accounts Discussion Area

Must be fate, I was just looking for somewhere to ask about business bank accounts!

I couldn't find whether it says this in the article but would interest earned in a business savings account have to be entered into our accounts as a business income?
(Thinking about having a business account with a linked business savings account so that we can put money away monthly to pay for the end of year tax bill)

Also, with accounts such as the Abbey one, which is free for day to day banking and looks great - from what I can see you can only pay in cash at cashpoints and only in notes (According to their website). Isn'tt that inconvenient?

Best answers:

• Must be fate, I was just looking for somewhere to ask about business bank accounts!
  I couldn't find whether it says this in the article but would interest earned in a business savings account have to be entered into our accounts as a business income?
  (Thinking about having a business account with a linked business savings account so that we can put money away monthly to pay for the end of year tax bill)
  Also, with accounts such as the Abbey one, which is free for day to day banking and looks great - from what I can see you can only pay in cash at cashpoints and only in notes (According to their website). Isn'tt that inconvenient?
• The 6% is only for new customers and only for a year then it drops to 0.1%
  If you join the federation of small businesses you get free banking with the
  co-op and a Ј25 bonus at the end of the year
  Hint for your cash is to put it into personal account then transfer it ( cheque/bacs/direct debit/standing order )
• Small businesses should consider joining the Federation of Small Businesses. In return for the membership fee, there are many different benefits, including free legal advice, cheaper healthcare, telecoms etc. However, best of all you also get access to a completely free of charge business account with the Co-operative Bank with all the usual facilities.
• Co-operatives can access the fee-free Co-operative Directplus account from the Co-op Bank without joining the FSB.
• Please note that the terms and conditions of personal bank accounts usually have a clause prohibiting any kind of business use.
• Whatever you do don't go with Barclays. They send you this calculator thing that you need to use to get online, then about 10 different passwords (ok, exaggeration, but lots), then charge for anything and everything. I've heard HSBC are much better, and they seem to still be making good money, so you know your money is safe.
  I've also heard good things about the co-op as a member of the FSB
• Alliance & Leicester Commercial bank (part of Santander group incl Abbey) has a good current account which is free while in credit within certain transaction limits. (We never pay except for bounced cheques). Also, you can pay in at any Post Office which is great if you live away from town, and has longer hours.
  One thing to be aware of if you use internet banking though: Santander group has a miserly Ј250/day faster payment limit against an industry limit of Ј10K (I keep emailing them but just get standard reply). Anything over this is by BACS (3 working days) and has to be drawn on cleared funds, so effectively it takes about 10 days from paying cheques in to money arriving in suppliers' accounts - always a factor when cashflow is tight.
• Bank of Scotland have a free internet and postal business bank account, only stipulation is that you have to maintain over 5k in credit to avoid any charges. Probably more suited to BACS paying customers though as any cheques have to be posted in the free envelopes supplied by BOS. Never been a problem with postal banking for us. On line access is also very good. If you can keep over 5k in you don't have any fees to pay.
• How do people find paying into an abbey account? We don't have a branch nearby and while free banking would be great if it is accompanied by increased petrol and parking it isn't much of a saving.
  What about Co-op how do you pay in with them?
  We have a Lloyds, HSBC and NatWest nearby are any of them any good for free business bank accounts?
• Oh and any difference between these banks when we come to get a credit/debit card machine?
• Martin indicates that you can use your personal bank account when you start trading which will not incur bank charges. As an accountant in practice I would not recommend this for two reasons - firstly your personal payments and non-business income are going to be mixed up with business transactions which leads to extra work in preparing your accounts.
  Secondly if Her Majesty's Revenue & Customs undertake an enquiry into your business affairs they will want to know the source of all bankings into your personal account and if you cannot adequately explain them then they will want to include these amounts as your business income. Common problems are loans received from friends/family to finance the business venture or amounts you pay out (say for concert or sports tickets) for a group of friends who then pay you back by cheque.
  So I always recommend any new business to open a business bank account. However once you become self-employed you have to keep proper records of your personal transactions, both income and expenditure, for at least six years because HMRC now have the power to look at your personal bank accounts. As indicated above they can ask about the source of money banked into your account and if your business isn't showing a profit they will wish to establish how you finance your personal expenditure. Therefore if you have good records of both personal income and expenditure you will be able to properly address any issues that they raise.
  Since the big banks generally give 18 months free banking to new businesses, why not open a separate business account and organise your business finances properly from the start?
• ***Boardguide comment**
  The previous sticky has been unstuck and can be found here:
  Business Bank Accounts
• Hi all,
  I have started up my own business (slowly but surely) and now need to set up a bank account. I have had a read around the boards, and have decided to simply open a new current personal account rather than a business one, as I am just a sole trader, and will simply be invoicing customers, there won't be any cash or cheque paying in etc, and I just don't think I need one, at least not at first.
  My personal and joint current accounts are with Barclays, and I think it would be best to stick with them, at least then all my accounts will be linked and it will be easier to transfer funds etc. I will go into a branch and ask to open an extra account, but I'm just wondering what I should say. I imagine they'll ask what I need it for? I was planning on explaning honestly about my business, and I'm sure they'll try and sell me a business account, which I will turn down. Would it be easier to not mention my business? Will they refuse to let me have another current account if I refuse to have a business account? I'm just worried about what to say.
  I know others have used current/personal accounts for their business, and I'm just wondering how they went about it?
  Thank you!
• emski,
  If they ask you could say something vague like you want to organise your money in the future or that you want certain bills to be paid from one account.
• My banking needs are simple, but I do have a lot of accounts (I'm self-employed, my wife was temporarily self-employed, I manage my ageing mother's savings, etc etc). I've therefore used a lot of institutions over the past ten years or more.
  I strongly recommend everyone avoids the Cooperative Bank for business banking online. Just search online for moneybox, marc palmer, coop, online banking etc for a ton of feedback. Their online system is not fit for purpose. Five years ago it was OK; now it is completely broken. (smile's personal online system was OK five years ago; now it's exactly the same, preserved in aspic; but at least it still works).
  How FSB can still recommend it is beyond me. I won't be renewing my FSB membership.
  NatWest seem particularly competent (unless you object to card readers - I don't). Conversely I tried to open an RBS small business account a couple of years ago and gave up after 50 phone calls over 6 months.
  I opened an A+L business account two years ago but imediately found their "security" processes far more cumbersome than I'd been led to believe so closed it. I had an Abbey business account for a year - they were competent but unpleasant.
  HBOS' competency has been declining noticeably in the past year (from an already non-stellar level) in all areas, not just business online. So I've been moving away from them - business first, when they said they'd charge c.Ј200pa for about 5 transactions a month; then personal.
  So I'm going to stick with smile for personal banking meantime; and give Coop business until March to convince me their new online service is imminent and competent (I have so few transactions I can cope meantime), failing which I might try HSBC.
• Hello
  I want to open a business account, is it ok to have it in my own name as i do a variety of things, plaster, tile, gardening and cleaning ovens. Would the HMRC be ok about this.
  Cheers
• Thanks earwig and fran for your advice. I applied online in the end, and fingers crossed in a few days I'll receive some paperwork. I chatted to an online help staff member to ensure I was getting the right account etc, no probs. Thanks again