Sole trader to limited company: Bank account

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Psyche
Psyche Registered Posts: 187 Dedicated contributor 🦉
Hi all
I have just had the unfortunate news from my bank that, despite my business manager having verbally told me it shouldn't be a problem, they cannot change the name on my business bank account from Death and Taxes to Death and Taxes Limited. This is very unfortunate indeed since nearly all my clients pay by standing order and it was a bloody nightmare getting everything changed over when I changed banks -- and I have three times as many clients now!

I'm inclined to just keep using the account and save a heck of a lot of palaver. Does anyone know of any legal reason I can't do this?
Thanks!
~Psyche

Comments

  • PeteLC
    PeteLC Registered Posts: 56 Regular contributor ⭐
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    Shall I take it that you are going from a sole trader to a limited company.

    If that is the case then it is more than likely to be the fact that you do not own the bank account and the company itself does due to being a separate entity itself!

    Just got this off a website:

    'Unlike sole trading, where your personal and business income are treated as one, as a limited company director your personal and business finances are kept completely separate'.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    My boss set up a second business as a sole trader and opened a business bank account but when he incorporated that second business we had to open a completely new account for which they needed a copy of the incorporation certificate.

    I'm fairly sure your bank account name has to say ltd

    Edit: We kept the business bank account purely for business but still had to open a completely new account
  • Psyche
    Psyche Registered Posts: 187 Dedicated contributor 🦉
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    Jilt: By "we kept the business bank account solely for business", you mean you kept using it, in addition to the limited company account, for company banking?
  • payrollpro
    payrollpro Registered Posts: 427 Dedicated contributor 🦉
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    Psyche,

    I would have been very concerned if your bank had allowed you to do that because it breaks a lot of rules, many of them statutory. Pete has got it right a sole trader is the business whereas the company is a completely separate legal entity even if you are the sole owner.

    Payrollpro
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    The problem with using the sole trade account as the main bank is that it is yours, and thus any money in is a directors loan to you. You therefore need to be aware of this in terms of overdrawn directors loans, beneficial loans, s455 tax etc.

    As long as you bear that in mind, there is no legal reason why you cannot use tht bank account.

    May I suggest that you open the Ltd co bank and set new people up from it, keep any reserves in it and over time transfer over to the Ltd bank account? Mght be a way round it.
  • deanshepherd
    deanshepherd Registered Posts: 1,809 Beyond epic contributor 🧙‍♂️
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    I agree that (most) banks are particularly unhelpful in this regard but some will do it. It is perfectly acceptable to transfer legal title of debts, assets, stocks and loans so why not bank accounts too.

    I think you are just going to have to get your clients to sign new standing order mandates or, even better, get them on direct debits instead - gives you much more control.
  • jilt
    jilt Registered Posts: 2,903 Beyond epic contributor 🧙‍♂️
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    Psyche wrote: »
    Jilt: By "we kept the business bank account solely for business", you mean you kept using it, in addition to the limited company account, for company banking?

    Sorry Psyche, no I mean't he didn't use for any personal transactions purely business. I edited my post due to PeteLC's post.

    The first account was closed when the limited account was opened. We use HSBC and at that time they insisted on opening another account.
  • Psyche
    Psyche Registered Posts: 187 Dedicated contributor 🦉
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    Well, bollocks. I guess there is a cost in palaver to saving 9% on NI >:(

    Now I just have to consider whether to stay with NatWest since they have been so UNBELIEVABLE UNRESPONSIVE on this whole subject, and if I have to change accounts anyway, no point in not changing banks...
  • Psyche
    Psyche Registered Posts: 187 Dedicated contributor 🦉
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    payrollpro wrote: »
    Psyche,

    I would have been very concerned if your bank had allowed you to do that because it breaks a lot of rules, many of them statutory. Pete has got it right a sole trader is the business whereas the company is a completely separate legal entity even if you are the sole owner.

    Payrollpro

    Can you reference which rules? The bank assume I would have known them. I assumed that they as the bank would have been the experts.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    Payrollpro is saying that the banks have adhered to the rules. The rules being that a limited company is a separate legal entity therefore has to have an account in their own name.

    It would be like you paying cheques in your name into Dean Shepherds account - 2 totally separate entities.

    However you would think that changing a name isn't that difficult for them!!
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    I've known a bank to change the name on an account from Ltd Co 1 to Ltd Co 2 where both were separate incorporated entities! whether they did that intentionally or thought it was a change of name I don't know...!
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