Is a business bank account necessary?

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EAP
EAP Registered Posts: 63 Regular contributor ⭐
Hi all
Hope you can help me?
My brother and his wife are self-employed and have a business bank account which is threatening to charge £3.00 per month plus charges on all transactions. They don't earn enough to pay tax and don't want to pay the fat cats at the bank any more than they need to.
Is there any good reason they can't go back to using their current account for business income and expenses - or even open a new current account just for this purpose? I've racked my brain and I can't think of any but don't want to give them dodgy advice.
Thanks in advance!
EAP

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  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Santander - free business banking.

    It's bank rules that say you need to have a business account, not legal ones.

    I personally used a separate current account for ages. Don't mix business and personal in the same account though - it gives HMRC leave to root through personal stuff in the event of an enquiry; a business account wold prevent this in a normal enquiry.

    :)
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    Monsoon wrote: »
    Santander - free business banking.

    :)

    Do you know what period they are offering this for?
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    jilt wrote: »
    Do you know what period they are offering this for?

    forever
  • EAP
    EAP Registered Posts: 63 Regular contributor ⭐
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    Sadly this is no good for my hippy brother. He wouldn't touch Santander with a barge pole. He is with the Coop for ethical reasons.
    Useful advice on the current accounts though.
    thanks
    :)
  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉
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    I agree with Monsoon, if they are sole traders and not in a partnership there is no requirement to have a bank account for business purposes. The banks sometimes insist but they cannot force your client to do so.

    There is a lot of sense, though, as Monsoon says, to have the account in order to make sure the business transactions are kept separate from your personal life. Watch out though, this is not necessarily enough to prevent HMRC routing through the personal finances. Sole traders have to put up with that as a matter of course.

    Personally, I too wouldn't touch Santander even if they paid me to have the account. Mind you, like everyone else, I am running out of people I am prepared to deal with. What do you call a thousand bankers at the bottom of the ocean? a good start!

    Payrollpro
  • EAP
    EAP Registered Posts: 63 Regular contributor ⭐
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    Thanks for that - they are in partnership though - my brother and his wife - with each other 50/50 - they would revert to using a joint current account and use this only for business stuff. This would be ok wouldn't it?
  • KaelaH
    KaelaH Registered Posts: 131 Dedicated contributor 🦉
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    HSBC have a good deal on business accounts too. Free banking for 18 months (2 years if over £100k turnover) and even when charges start there are no fees if you do most of payments and receipts online. You can bank 20 cheques per month free too. I've just changed to them and it was very easy transfer
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    payrollpro wrote: »
    Mind you, like everyone else, I am running out of people I am prepared to deal with. What do you call a thousand bankers at the bottom of the ocean? a good start!
    +1 to that!!

    I work on the theory they are all as bad as the others, with the exception of Co-op and Triodos. Apparently to get a business bank account with Triodos they give you some ethical questions to answer like if an oil company wanted you to be their accoutant, would you accept?

    EAP, I don't see why a regular joint account wouldn't work the same as a separate personal current account for a sole trader. As long as it's a separate account they should be fine, unless the bank complains :)
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
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    payrollpro wrote: »
    The banks sometimes insist but they cannot force your client to do so.

    I think they probably can, or at least force you not to use your personal account. I am sure it will be in their terms and conditions that a personal account is not to be used for business purposes.

    Never a problem of course until you owe them money. Then they could very easily suspend your account and take you through the legal process.

    Clients often ask whether working from home would create a problem with their mortgage company. I always say, no, as long as you are paying off the mortgage. As soon as there is a problem then you have given them a stick to beat you with.
  • EAP
    EAP Registered Posts: 63 Regular contributor ⭐
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    Thanks for all the advice.
    I'm the opposite to Monsoon in that I work in Management Accounts (and love it!) rather than practice, so these practical questions always catch me out. I much prefer playing with spreadsheets and graphs to doing anything useful.
    Thank goodness for AAT forums!
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