Business bank accounts

[marknotgeorge]

The accountancy practice I work at use Jordans for our company formations. They cost a bit more than some of the other companies, but you get all the associated documentation in paper form. Some companies just send out PDFs.

 

[vickster]

[QUOTE 4267005, member: 9609"]

I am curious as to why the firm you would be working for is insisting on it, I can't see how it would make any difference to them, I have never come across such a requirement.[/QUOTE]

I don't have details, only that I received this a couple of days ago...


As a freelancer working with .., I’m contacting you to let you know that, in order to meet 'Parent company' and HMRC guidelines, we shortly will not be able to process payments from those of you who are operating as a Sole Trader. But don’t worry, we have a solution. We will be partnering with YunoJuno - an online freelancer management platform

 

[vickster]

Thanks @Onyer @chris harte

Regarding the contracts, my understanding is you can work for a single employer for up to two years before hmrc get sniffy, at which point you either have to go permanent or move on for at least a few months. From Oct 2015 to August 2016 I will have had two 4 month fixed term contracts (with March 2016 off for holiday and surgery, when I earned nothing)

I have other irons in the fire and hope to work for at least two other businesses August to December or longer, as a freelancer on a daily rate which is why I need the ltd company. Yes I understand that I'd be the director and that the business would pay me a salary. The details I need to confirm with an accountant as suggested, ditto the VAt thing. I don't think I'll hit the VAT threshold this tax year, but will register if recommended by the accountant

I need to arrange professional indemnity cover, important given the nature of my work and also income protection, critical illness cover etc. I've started to get some quotes

It's all a bit complicated having been employed on Paye!

 

[Supersuperleeds]

I would go an speak to an Accountant and a lawyer as there are so many different options and problems. Off the top of my head..

If you register for VAT do you go for a conventional registration or get on a flat rate scheme?

If you go down the Ltd route, how do you take you earnings? If you take a salary your NI will be on a directors basis not paye basis. If you resign midyear for whatever reason you can get a big NI bill due to the way it is calculated.

There are also insurances to consider. You need to ensure if someone thinks what you have done is rubbish and they sue you that are properly indemnified.


How are your service contracts going to be written so that you are not seen as an employee on long term assignments in HMRC eyes.

The bit in bold isn't strictly true. If @vickster pays herself regularly and through a payroll (i.e. attracts PAYE) then the directorship is effectively ignored and the NI is only on the pay in the period. The easy way to do this is set yourself a salary that your company can afford to pay and if you have a load of work and need the money either pay a bonus or a dividend (get advice on which is the best to do)

 

[vickster]

Thanks I expect to have a higher annual income, let's say 25% more, obviously without holiday and sick pay, nor pension contributions and what not. So I guess I'd match my current monthly take home which would presumably leave me ample to pay tax and NI when needed as more than the amount I'd pay myself would remain in the business account

I understand that if I work from home, the business can 'claim' for space, utilities, landline and mobile phone, broadband etc. I'd confirm all of this with the accountant of course

 

[SpokeyDokey]

A linked bump for this...someone has said that I need to get professional indemnity insurance. Anyone got such and through whom? AXA seem to offer, or I'd prefer to go with a similar big company who might actually pay out should someone claim against me

Also, regarding setting up the Ltd company, I can do this directly online via hmrc or apparently you can buy off the shelf packages with the company registered elsewhere? What's better? I'm in no great rush as I'm contracted until early August on a fixed term

Bank wise, I think I'll go with Natwest as it'll be simpler, but the free banking starts from the day of set up so I'd be best to wait until I know when money will be going in

I still need to confirm with my mortgage provider, but I might just pay it off if it's how much I think it probably is!

Much life admin to do!

@vickster

I own/operate a small Ltd company.

If you have an accountant it is precisely 100% zero hassle to set it up and then prepare/submit the annual accounts etc. Just instruct him/her and they will deal with it.

They'll also deal with shareholdings, monthly pay return to HMRC and dividend calculations when they prepare the annual accounts.

Mine charges a very reasonable £450 inc' VAT for this - although the paperwork from me to him is spot on so life is easy his end.

 

[vickster]

Thanks. I don't have an accountant as yet but will get sorted before this contract ends

 

[SpokeyDokey]

Thanks I expect to have a higher annual income, let's say 25% more, obviously without holiday and sick pay, nor pension contributions and what not. So I guess I'd match my current monthly take home which would presumably leave me ample to pay tax and NI when needed as more than the amount I'd pay myself would remain in the business account

I understand that if I work from home, the business can 'claim' for space, utilities, landline and mobile phone, broadband etc. I'd confirm all of this with the accountant of course

@vickster

Speak to your accountant about minimising your NI - could be zero which is esp' useful if you have enough State Pension qualifying years.

Also, do you have a partner that could be a shareholder as that way you will have 2 x £5000 tax free dividend allowances instead of one.

 

[vickster]

Nope, no partner

 

[mr_cellophane]

Bank - Santander. You can link it to any private accounts you have for internet banking which make transferring salary, expenses etc easy.
Phone, broadband, etc - if they are in your name you can only claim 80% against the business. If they are in the company name you can claim all of it (and my ee mobile charges went down when I changed to a business account)
The ideal scenario is to maximise the company's income, but make a loss at the end of the year

 

[vickster]

Thanks
My other accounts are with Natwest and I have no plans to change hence my current preference for Natwest. They also offer a longer intro no fee period

Yes, everything in my name at present, my monthly mobile bill is very low, sim only about £13, unlimited texts and calls (I bought my own iPhone) , can't imagine a business contract being cheaper?

I will need to buy a new laptop once I'm freelance, I assume I can claim for that? I definitely need to talk to an accountant being clueless!

 

[mr_cellophane]

Buy, buy, buy
Laptop absolutely. Bike to get around - it has to be a pool bike and available equally to all your employees. You can't claim 20p a mile if you do, but lights, tyres, insurance, etc all become a business expense.

 

[vickster]

I won't have any employees. I have 4 bikes and a car already. I expect quite a lot of my work will be home based, although I may need to go to employer offices

Can private healthcare be covered at all? Costs me £180 a month and rising! I do get my money's worth (un)fortunately!

 

[screenman]

Buy, buy, buy
Laptop absolutely. Bike to get around - it has to be a pool bike and available equally to all your employees. You can't claim 20p a mile if you do, but lights, tyres, insurance, etc all become a business expense.

How much do you proportion to private use? Do you claim this as a capitol cost or one on which you claim depreciaton allowance. I am interested as I have been self employed for 40 years and have never claimed tax relief on such items.

 

[SpokeyDokey]

Thanks
My other accounts are with Natwest and I have no plans to change hence my current preference for Natwest. They also offer a longer intro no fee period

Yes, everything in my name at present, my monthly mobile bill is very low, sim only about £13, unlimited texts and calls (I bought my own iPhone) , can't imagine a business contract being cheaper?

I will need to buy a new laptop once I'm freelance, I assume I can claim for that? I definitely need to talk to an accountant being clueless!

If you think in terms of business costs as opposed to 'claiming for' that will be a better way of understanding what you can legitimately put through the business as a cost.

In essence any expenditure that you incur in the course of your business is a cost. Your accountant will advise as to how these separate costs can be treated eg some expenditure items (capital investment) can be depreciated over time etc. I claim for use of home, my mobile, my broadband and everything down to the last penny that I use in the course of my work goes through the business.

Tbh an hour or two spent discussing these issues with your accountant will take away a whole heap of worry and your new venture will seem much more simplified allowing you to concentrate on what it is you do for your customers.

Business finance etc for a small business is pretty straightforward esp' if left to an expert to sort out. Over the course of a year (for a small business) it's a tenner a week well spent.