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Do I need a business bank account and register a name?

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  • Do I need a business bank account and register a name?

    I've told HMRC i'm going to be self employed. And I've contacted Business Link organisation for workshops, etc.

    I've kept records since I started in Sept of jobs i've done. Do I legally need a separate bank account or is it a nice-to-have?

    Also as a sole trader do i need to register my company name, or does that just stop anyone else from getting it (if so need to apply for a slightly diff name as someone already has that one).

    Thanks.
    Louise (Sew Crafty)

    http://www.folksy.com/shops/sewcrafty

    http://www.facebook.com/sewcraftyshop

  • #2
    You don't need a business bank account legally but it does help to keep your business and personal finances separate. You will need one if you decide to accept credit card payments in future as you will need to have a merchant account and this can only be linked to a business bank account.

    As for trading, you can trade under your own name so don't particularly need to have a company name and this won't stop someone else having the same name as you. The only time there can only be one company using a name is when you get down to web domains - there can only be one instance of a domain name under each type (e.g. .com, .co.uk, .net, etc) however adding hyphens and underscores increases the options!

    What I would say is that if there is a company name you are planning on trading under (other than your own name), it is worth checking that there is a domain available using that name or something very similar otherwise you may find that your website address is nothing like your trading name and you could potentially lose business to another company.

    I am sure the Business Link information will be useful. Good luck with everything.
    Ali x

    Etsy Shop: aliscraftstudio.etsy.com
    Facebook: AlisCraftStudio
    Follow me on Twitter:
    @AlisCraftStudio

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    • #3
      Yes to everything Alicat says.
      You don't NEED a business account until you decide to take cards.
      It's quite nice having one, until they start charging. Then it becomes annoying. If your personal account is free and you don't care if business and personal money gets muddled up in the bank (you are keeping it separate on paper) I would stick with that until you get 'bigger'.
      Sole Traders can call themselves anything as long as their real name and address is on their paperwork eg invoices, receipts etc. If you are selling from a website it needs to be on there too.
      No registering needed and don't worry about a similar name, unless people are going to confuse the two of you (that's in nobody's interests) or you have picked Disney or MacDonalds (they sue) (allegedly).
      Have fun and all the best.
      AnnieAnna

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      • #4
        To simplify the accounting why don't you open another personal account, I have a business account but as said you do not need one but could be worth a separate account in case you ever get an HMRC audit, otherwise they will look at your personal account and you wil have to be able to account for everything in that account and any receipts could be brought into question.

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        • #5
          This was about to be my next forum question!

          I don't really want to have to set up a buisness account as I am not sure how much money I will make however wasn't sure if I legally needed one. I am going to try and arrange to go see bank next week get this sorted out as I definetly want a seperate account to make life easier.
          Laura x

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          • #6
            Originally posted by laura-pro View Post
            This was about to be my next forum question!

            I don't really want to have to set up a buisness account as I am not sure how much money I will make however wasn't sure if I legally needed one. I am going to try and arrange to go see bank next week get this sorted out as I definetly want a seperate account to make life easier.
            Be careful that if you are persuaded to open a business account, you check carefully all the charges. Many banks offer free business banking for a certain amount of time but that will run out and you need to make sure you aren't up for a ton of charges after that time. You can, of course, change your account before the free period ends but that can be a right royal pain in the a***!
            Ali x

            Etsy Shop: aliscraftstudio.etsy.com
            Facebook: AlisCraftStudio
            Follow me on Twitter:
            @AlisCraftStudio

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            • #7
              Thanks for the heads up Ali, I am going to go in the morning to arrange a meeting for next week, find out what sort of id I need to bring and that kind of stuff but I will bear this is mind, hoping they won't push me to take a buisness account but if they can get something out of they no doubt will!
              Laura x

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              • #8
                I predict they will push you into getting a business account.
                I predict they won't tell you you can use a personal account.
                I predict they won't tell you about anything that STAYS free.
                Don't do it.
                Search the web and find out yourself what's what.
                Moneyexpert and comparisson sites are out there to help you, sometimes set up by people cross about having been'ripped off' by the banks and sometimes because there is something in it for them (like commission). Pick your way through all the small print and don't be bullied.

                AnnieAnna, who is feeling ripped off and bullied by the banks and wasted less money when she was an innocent only using a free personal account.

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                • #9
                  I agree with Annieanna, I would open a savings account with non limited access where you can internet bank and transfer money between accounts if needed. In fact all I would say to the bank is you wish to have a savings account, as they will push for you to open a business account and yes they are expensive. You don't need one in the early stages, I haven't had one for the past 6 months of being self-employed. I am getting one now - but only as I have to now! (opening a shop and need pdq terminal etc.)
                  Facebook page:http://www.facebook.com/pages/Jewell...57517267614070
                  Folksy shop: http://www.folksy.com/shops/jewellerydesignsbycarla

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                  • #10
                    You may be just better off opening up another personal account as business accounts tend to charge more for everything, just for the privilege of having one. As regards registering your business name its not necessary to register it although you can if you wish register with the National Business Register (they have plenty of useful advice on their site). If you do intend to to Ltd at some point though you can register the business name now as a dormant company until such time as you decide to use it. The purpose being that no one else can register the name in the mean time, you can check companies house to see if the name is registered as a Ltd company. If its gone and you wish to go Ltd in the future its still no problem as your company name doesn't have to be the same as your trading name.

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                    • #11
                      If you open a business account with Santander it's free for life as long as you don't put more than £3000 cash in a month or have a balance over 1 million.
                      Sarah

                      Folksy Shop
                      Blog

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                      • #12
                        I've just opened another personal account for my business dealings. I actually had a chat with the lady at the bank and was upfront about what i was doing and said i'm not going to be earning hundreds of thousands of pounds (that would be nice like!) and she could not see that it was a problem. Its linked to my main account so i can easily transfer money if i need to. handy to keep it separate. I've been using my main account for a couple of years, wish i'd sot a separate account earlier on. I will have to look at business account when the time comes though but really i am just at start up stage of propper setting up business rather than just selling odd things as a hobby.
                        Good luck

                        Sue
                        www.artbysusanjefferson.co.uk

                        Twitter @suecreative

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                        • #13
                          Hi Squiggly, I used a personal account for yonks and was well pleased as it was free. So my warning comes when you decide to pretend to be big and get a card reading machine. Everyone then insists you have a proper business account.

                          And a second warning - you can think you are clever picking a free business banking account then as fast as blinking an eyelid it's no longer free.....but get this! Anyone opening a new one gets the free thingy!

                          And a third thing, if you go for a card machine you need a merchant account as well. This is NOT free.

                          Bankers....and they wonder why we hate them, sigh.

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