Separating Personal and Business Bank Accounts

[Hylo]

I used to have a business bank account when I was full-time self employed but closed it down after I went back into full time employment nearly two years ago. Since then I've been using my personal current account to bank any money I've made from web development etc. and have kept my financial records as usual.

My concern now is if the Inland Revenue decide to audit me (which would not be worth their while for the small amount of part-time self employed earnings I've made) will their be problems with separating my personal expenditure etc. from those of the business and would I be better advised to just set up a business bank account again and do the thing properly?

[Chris]

I'd keep them seperate still. Here you don't have to pay any monthly fees for a business checking account so there is little reason not to do it.

[Blue Cat Buxton]

I think you are *meant* to register as self employed and have a seperate bank account -
(assuming Northern Ireland tax is the same as England)

[Hylo]

Don't worry BCB, I'm still registered as self employed (not dodging the taxman!) but there is no stipulation as to having a separate bank account and with the small amount of third party development I was doing I didn't think it was worth paying bank charges for a business account as well. Now I'm bringing in some more client work and affiliate etc. earnings from my own sites I've been thinking I'd be better separating the two and making things more transparent if Inland Revenue ever did come calling.

Chris, most business accounts in the UK do have charges even for small amounts of transactions so it can be quite a kick in the cashflow when they are charging you a quarterly service charge as well as fees for writing cheques and for depositing cheques. Banks: the legitimate face of money scamming.

[Cutter]

I don't know how Ireland works, but in the US its good to keep the two seperate or else a judge could decide to "pierce the corporate veil" and make you personally liable for things (if you have an llc or corp at least)

[r2d2]

If you are currently using a personal bank account, why not just use a separate, but still personal, bank account? Surely if you use another it doesnt need to be a business account?

[Cutter]

I don't know what the rules in the UK are. You may want to check with a lawyer or see a law book.

[chromate]

If you are a UK sole trader, then there seems little point paying for a business account. As r2d2 says, just open another personal account and use that for your business dealings. I have a high interest savings account that is almost as fluid for transferring funds as a normal current account. I use that in conjunction with my normal current account without any problems (so far!).

If your business is setup as a Ltd company then it's probably worth having a business bank account as you'll want to receive and make payments in the company's name instead of your name.

If it wasn't for the charges, I would have a business bank account anyway, just to keep things completely separate. It's hard to track expenditure amongst my other outgoings, so it's definitely something I'll consider setting up this year. But the charges and conditions, such as keeping a certain amount in your account, really do suck.

I hear Royal Bank of Scotland is good as far as business accounts go.

[r2d2]

I have a business account with Alliance & Leicester: http://www.alliance-leicestercommercialbank.co.uk/content/SB010002.asp

Very low charge structure (I don't pay any fees) compared to the big bank business accounts.

[Hylo]

Thanks guys, I just want something to keep my personal and business income and expenditure separate and easie to handle so another personal account may well be the way forward.