Forum

• # 72483
• Fri 24 Jun 2011 12:15 AM

Hello everybody,

I am just about to practise a bookkeeping service as a sole trader, using a trading name. I've got a few questions I would like to ask on bank accounts...

• I understand being a sole trader you don't need to have a separate bank account, but what if you are going to run your practice with a trading name, will you need to have a separate bank account then?

• Do you have to have a business current account or can you just have a personal current account? (Why I'm asking is because there are fees on business accounts which you have to pay on monthly/quarterly basis... that I would very much love to avoid paying (don't we all?!) especially if the practice is small and new!!)

• Will the bank account name need to the trading name or can it be in the proprietor's name?

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• # 72502
• Fri 24 Jun 2011 01:57 PM

Hi Lisa

Having worked for one of the high street banks for 20+ years (not any more!!), I can help you here.

First of all, from the banks point of view - they only provide free (!) banking for personal customers, so the thing to remember is that if at any point they suspect a personal account is being used for business purposes they won't be happy.

So the only way you can use a personal account is if you are happy to have the account in just your personal name, and therefore any payments must also be made out to you personally. If you want to use a trading name, then you're not going to be able to use a personal account.

Usually when someone uses a trading name the account is set up as "Mr J Bloggs trading as Bloggs & Co". This then means that payments can be made out to either Mr J Bloggs or to Bloggs & Co without causing a headache. You can, however, choose to just have "Bloggs & Co", this will mean that you must ensure no-one makes payments out to you personally.

As regards charges on business accounts - most of the banks offer a free period for new business accounts (I opened mine in January and am on 2 years free banking), so one option is to keep changing banks each time your free period is ending. They also offer different types of business accounts, depending on how you're likely to use it, turnover etc. So even when I finish free banking I'm not expecting to pay charges as I will be utilising the internet, and ensuring that I make & receive the vast majority of my payments via electronic means.

I hope that helps, but happy to help if you have more queries.

Helen

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• # 72512
• Fri 24 Jun 2011 04:25 PM

I have had a business account with Santander (Abbey when opened) for 12 years and not had any charges. They do still say that it is free banking provided you keep within their criteria - for example you will get a charge for a bounced cheque and other similar types of transaction.

The downside used to be that all transactions had to be by post so it could be seven days before the credit appeared on your statement and on occasions the cheque was lost in the post (which makes a change from debtors using the excuse!).

Now I pay all my cheques in using their cash deposit machines. On the rare occasions when a client pays ,me cash I draw a cheque on my personal account in favour of my business account and treat it as though it came from the client and pay in as normal.

Online banking is available just as with any other bank and again with no charge.

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• # 72529
• Sat 25 Jun 2011 11:24 AM

To Helen and Geoff, thank you very much for your inputs.

Helen - that certainly makes sense with all the things you have said and you have put my mind at ease. I guess I was trying to be greedy with regards to bank charges, of course, how would bank make money if they didn't charged people using their services?! :o)

Geoff - how funny, I was just browsing Santander's website just as you posted your comment... that must have been a sign!!

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• # 72672
• Wed 29 Jun 2011 06:36 PM

Hi Lisa

In principle, it is a good idea to have a separate bank account ring fenced for sole trader activities. In practice, many sole traders start out with a business bank account but fail to maintain the discipline of keeping business and personal transactions seprarate.

If you are using a trading name, this may help the discipline factor if you set up your business bank account under your trading name as Helen has described below.

Phil

www.marshesllp.co.uk

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