Bank Account for a limited company
Discussion
About to set myself up as a limited company and need to sort our a bank account to get paid into
Do I need to pay for one of the banks' 'business' offerings, or could I use a separate personal account?
Reason I ask is that I've an offset mortgage, and my current bank allows me to set up separate sub accounts, each with their own bank account number and title. Therefore the monies would be located away from my personal account, but still contribute to the offset (I'm sure i'd then have to declare any benefit, but every little helps as they say)
Good idea? possible? or frowned upon?
And I will also be getting professional advice, but always worth asking the PH massive...
TIA
Do I need to pay for one of the banks' 'business' offerings, or could I use a separate personal account?
Reason I ask is that I've an offset mortgage, and my current bank allows me to set up separate sub accounts, each with their own bank account number and title. Therefore the monies would be located away from my personal account, but still contribute to the offset (I'm sure i'd then have to declare any benefit, but every little helps as they say)
Good idea? possible? or frowned upon?
And I will also be getting professional advice, but always worth asking the PH massive...
TIA
With a limited company, you MUST open the business bank account in the name of the limited company. You have created a separate legal entity to run this new business and the new legal entity is therefore NOT you.
It is important that the proprietor of a new limited company gets the notion of the separateness of the trading entity and themselves properly established in their heads as early as possible.
You cannot run the transactions of a limited company through a bank account in the personal name of a director/shareholder of the company.
If you do, you will end up in the most impossible mess - as well as breaching loads of Companies Act and Corporation Tax regulations..
It is important that the proprietor of a new limited company gets the notion of the separateness of the trading entity and themselves properly established in their heads as early as possible.
You cannot run the transactions of a limited company through a bank account in the personal name of a director/shareholder of the company.
If you do, you will end up in the most impossible mess - as well as breaching loads of Companies Act and Corporation Tax regulations..
Banks tend to frown upon people using personal accounts for business usage. Also, it's important to remember that the LTD company's earnings are NOT yours, so separation is important.
One way that people achieve what you want is to take Director's Loans from the LTD to themselves at the start of the financial year, which they then hold in an offset against their mortgage and repay back to the LTD at the end of the financial year. Whether this is wise or not is not a question I can answer.
One way that people achieve what you want is to take Director's Loans from the LTD to themselves at the start of the financial year, which they then hold in an offset against their mortgage and repay back to the LTD at the end of the financial year. Whether this is wise or not is not a question I can answer.
No need for that. There is a point I was trying to emphasise - which I think is very valid for "start-up" businesses.
When a person decides to start "trading" - whether through a limited company or through some other business vehicle (partnership, sole tradership, LLP etc), then they need, from the very outset, to get into the frame of mind that they are now in BUSINESS and that the whole notion of "jobs and employment" is nothing to do with the new path on which they are embarking
I think it is a very important mental step for a new "business person" to take and if they don't make that step, they are starting off on the wrong foot.
When a person decides to start "trading" - whether through a limited company or through some other business vehicle (partnership, sole tradership, LLP etc), then they need, from the very outset, to get into the frame of mind that they are now in BUSINESS and that the whole notion of "jobs and employment" is nothing to do with the new path on which they are embarking
I think it is a very important mental step for a new "business person" to take and if they don't make that step, they are starting off on the wrong foot.
It's illegal for a start - so he might minimise his outgoings in the short term - until he discovers he has contravened S455 of the Corporation Taxes Act and has failed to disclose illegal dividends, overdrawn director's loan accounts in the accounts or a cheap or free loan to a director on the P11D etc.
The penalty Corporation Tax he has to pay could wipe him out.
The penalties for submission of incorrect P11Ds could also be a bit expensive.
Best to do it right from the start.
And if you look on your limited company as a vehicle and not as a trading entity, you could be inviting trouble from HMRC
IR35 is all about operating through a limited company when what is going on ISN'T a business.
The penalty Corporation Tax he has to pay could wipe him out.
The penalties for submission of incorrect P11Ds could also be a bit expensive.
Best to do it right from the start.
And if you look on your limited company as a vehicle and not as a trading entity, you could be inviting trouble from HMRC
IR35 is all about operating through a limited company when what is going on ISN'T a business.
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