mpo40 started this topic @ 16:58 on 28/03/2005
Hi all
some advise would be very much appreciated. I am now officially self employed working for a company who is paying me a retainer fee to work for them. I would also like to trade myself within the healthcare sector that i have been involved in for some time. I have some contracts available to me and would like to take them on, this will be a minimum outlay to myself with high profit margins.
I would like to call myself a company name however i am unable to obtain a full bank account due to getting myself into personal financial trouble a few years ago. I have now paid most of this back but still have 2 outstanding ccj's.
Is it possible for me to open a business account?
I do not need an overdraft and have some money to put in allbeit a few hundred pounds. I will need to register for vat and need to do things right.
I have the contacts and the supplying companies help all i need is the professional look of a company as i will be dealing direct with large organisations.
Any advise would be greatly appreciated.
Thanks
RE: sole trader business bank account
James Smith | 29/03/2005 08:51 AM
I disagree with eagle. The banks will check your credit rating when opening an account.
In terms of a business account with CCJ's probably you best bet is to try your existing bank and specifically ask for an account without an o/d facility. They may well be flexible as they know your history, and if this bad credit was a one off event they may well be helpful. Given your business model is a service industry one they tend not to run negative cash flows so you may be able to convince them the risk is small.
You probably won’t get very far with the likes of Abbey or RBS who have free business banking as they like "clean" customers.
I think NatWest do a business account for poor credit, so worth a go too.
You say "I would like to call myself a company name", you need to be crystal clear here about the distinction between setting up as a limited company and being a sole trader. Have a look at the main section of this site and the one for business link. There is a lot more to it than simply registering a "name" at companies house. A ltd co. may be suitable for you from a tax savings point of view if you are earning in excess of £15k-£20 per annum from your venture, but this means an extra level of costs too. It’s a big topic but worth examining properly perhaps at a later date.
Finally if you are poor with your cash – make sure you keep back enough money to pay your tax bill. If you retain a straight 1/3 of your earnings in your account you will be fine for moderate earnings.
I hope that is some help.
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
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Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: RE: sole trader business bank account
mpo40 | 29/03/2005 07:30 PM
many thanks for the prompt replies.
James, if you are saying you need to be a limited company to need a ' name' can i trade as a sole trader through a normal basic bank account in my name that is soley used for the business. Can i use my own name as the company? therefore all the payments to me would be in my own name or would this be confusing for tax purposes with the inland revenue?
Thanks
RE: sole trader business bank account
James Smith | 30/03/2005 09:07 AM
Mpo,
To be clear as a sole trader you can have a "trading name" that isn’t your own name so long as you included your own name on all letter heads etc. Eg a hairdresser can call their shop "Snippy Snips" so long as they put "Sharon Smith, trading as Snippy Snipps" on their letter head etc.
You can also trade just in your own name if you wish.
As a sole trader there is no legal distinction between you and the business so you can run it via a personal account, however most banks will charge you if they find you are doing this and it is a lot easier in the long run to open a specific business account.
I suggest you have a good look at the main sections of this site and the business link site where the distinctions between limited companies and sole traders are looked at in more detail.
Regards,
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James Smith
Chartered Accountant
www.jamesesmith.co.uk
01235 536 773
---------------------------
Your indispensable guide to Small Business Bookkeeping, Self-Assessment & VAT
RE: sole trader business bank account
Ozzy | 30/03/2005 09:21 PM
Hi Mpo,
I am reading this as that you wish to be a sole trader, so assuming this is the case and taking into account your CCJ's I would recommend talking to the Natwest Direct Business Banking team. They offer a telephone and Internet banking service who can support people with a less than perfect credit history... and YES the banks WILL do a credit check on you whether you trade as a sole trader or a Limited company. Banks credit check all officers and majority (over 25%) share holders of Limited companies. As a sole trader the bank account is a hybrid person/business account so you are treated as an individual in the eyes of the bank.
Being honest I don't think any of the other big 4 banks will be able to help you, nor will Abbey, or HBoS.
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Richard Osborne
Quick Formations Limited
A simple online company formation and company credit checking service...
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Network online and free community support for your business at the UK Business Forums
RE: RE: sole trader business bank account
Muttley | 24/05/2005 02:36 PM
I concurr,
you WILL be credit checked.
I'm in a similar position, I am trying to open a basic business account (no frills, no credit, no overdraft type) but have been rejected by the majors as well as the Co-op (don't be taken in by their "ethical" stance).
I suffered a heart attack just under 2 years ago which derailed me financially - I was at the time (and still am) employed but I was happily working as a consultant in my spare time, we came to rely on this extra income to the point that when I was unable to earn it we were in trouble.
Like most people in this day and age we were living fairly close to the wind financially. My salary kept us going when I was ill BUT we had little choice but to default on a credit card as money was tight - after all when you are a 35yo non smoker, slim, fit, physically active with a healthy diet the last thing you expect is to fall over with a bl**dy heart attack. We never defaulted on any of the loans we had (we live in rented accomodation) so were OK there. Anyway couple the credit card default with a history of student debt (no parental support had to work my way through uni when aged 24) from over 10 years ago (yes it shoud have been struck from my record by now but you don't seriously expect the banks and financial institutions to play fair do you) means that I am a poor credit risk.
(BTW Get your colesterol level checked, mine never had been - my liver was producing x10 more colesterol than normal, hence the heart attack - don't you just lurve those little genetic time bombs your parents leave you) ;P
I'm now more than back on my feet and my consultancy sideline has grown out of all recognition and I need to go "formal" and start official trading. Hence the bank account.
I'll try NatWest (to be honest I hadn't thought of trying them as I had been rejected before by the others) (and the fact that there isn't a great many branches in Scotland) and I'll report back on my findings.
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Muttley
AKA Gavin
http://www.wiredhouse.co.uk">href="http://www.wiredhouse.co.uk">http://www.wiredhouse.co.uk
RE: sole trader business bank account
sweetestheart | 25/05/2005 04:13 AM
What a vicious circle this is
As a student i spoilt my credit and now i have just opened up online line business i have clients who would like to make some payments to me but my credit history has made me not get any basic bank accounts.
PLEASE PLEASE PLEASE COULD SOMEONE HELP ME OUT!!!
RE: sole trader business bank account
CityAccountingBureau | 29/04/2008 07:17 PM
Answers!
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