Sole trader and bank account

whiterose

I wonder if anyone could help me with something that is puzzling me:
I have a new client, and his previous accountant has sent me last year's accounts and other paperwork. In the balance sheet is a figure for the balance in the bank account. It is the correct figure according to the bank statement.
BUT - looking at the paperwork given to me by the client, it turns out that this bank account is in fact a joint account with the client's wife, who is not involved in the business, and not used solely for business at all.
How on earth do I work out the year end bank balance for my client?! Am inclined not to put a figure in at all, and to 'withdraw' last year's b/f balance as drawings to account for it.
Any thoughts anyone?

:confused1:
Many thanks.

Bluewednesday

Perhaps the previous accountant had already accounted for the private income and expenditure through drawings and cash introduced?

That's how I would deal with it, I wouldn't do anything like you are proposing.

Jan

We run my husbands business through our joint pte bank account. Never been a problem, just saves on charges, until the bank complains. We were advised to do this by our first accountant year ago and have done ever since.

I just make sure that anything private is put to drawings/capital introduced.

AK002

As above, i wouldn't remove it!

Just post all non business income/exps to cap into and drawings, easiest way.

You could advise him to start a business only bank account and it may cut down your fee as it will take you less time to analyis if you know all expenses are buisness.

farmergiles

Jan wrote: »

We run my husbands business through our joint pte bank account. Never been a problem, just saves on charges, until the bank complains. We were advised to do this by our first accountant year ago and have done ever since.

I just make sure that anything private is put to drawings/capital introduced.

This is ok until such time as you get a Revenue investigation/enquiry. They then require you to substantiate all income and if you can't ie don't have payslips etc, then they will assume that it is undeclared income and tax/fine you accordingly.
Although there is no legal requirement to maintain a separate bank account for either sole traders or limited companies, I would advise it for peace of mind. Banks are offering charge-free accounts for businesses these days.

You may also find that, if the bank thinks you are running a business through a personal account, they may/can hit you with some hefty charges. Halifax did the same to me many years ago.They back-dated for 6 months. Cost me a bomb!!!

Jan

They then require you to substantiate all income and if you can't ie don't have payslips etc, then they will assume that it is undeclared income and tax/fine you accordingly.

MY money goes through another bank account, and I'm paid direct, so that should answer that problem. Our bank have already queried it and we went in to sort out the account, only for them to say they needed a letter from our accounatnt to say we were running a business????? Anyway, lets just say the business is doing well & they don't want to loose it!
But thanks for the advice.

I was probably working for the Halifax when they decided to hit people who they thought were running a businees through private accounts - they got a quite a bee in their bonnets if you had a lot of transactional activity. Upset quite a few people at the time.

Diannew

farmergiles wrote: »

This is ok until such time as you get a Revenue investigation/enquiry. They then require you to substantiate all income and if you can't ie don't have payslips etc, then they will assume that it is undeclared income and tax/fine you accordingly.
Although there is no legal requirement to maintain a separate bank account for either sole traders or limited companies, I would advise it for peace of mind. Banks are offering charge-free accounts for businesses these days.

You may also find that, if the bank thinks you are running a business through a personal account, they may/can hit you with some hefty charges. Halifax did the same to me many years ago.They back-dated for 6 months. Cost me a bomb!!!

I use to work for the Halifax...and they do have people monotoring Account's to see if they are possible business use eg large amounts of deposits and cheques being paid in...and they do catch you in the end and back charge you and possible closure of account.

whiterose

Thanks everyone for such speedy replies.

Psyche

I was able to open a business bank account at Alliance & Leicester with no fees for two years, and a debit card. Possibly because I was an existing personal customer but it is worth checking out! I can't imagine putting my business money through my personal bank account, what an accounting nightmare.

~Psyche