Limited company but personal bank account?

[bonnielochs]

Hi, hoping I can get some advice, please. Ive posted on MM also but rarely get responses there.

I am an Accounts Admin for a small business. The company I work for has hired a self employed contractor (Limited company). He has advised that there has been a delay in his business account being set up due to a backlog at Barclays (unsure if true) and therefore he may need his first payment actioned to a personal bank account.

Google has indicated that a Limited company is legally obligated to have a business account but I'm unsure of any consequences to us, the payee, if we pay to a personal account.

Also unsure if there is any potential issue in him claiming to be a Limited company but doesn't have the business account. How can he have one without the other?

Assuming he is director of his own limited company (not a sole trader)...
It is relatively quick to start a limited company but slower to set up a limited company bank account, and it is also slower to set up a bank account for a company than for an individual (banks do a lot of due diligence on companies due to money laundering), so it is possible to have the situation where the company comes into existence before the corresponding bank account does.

@DavesSpareDeckChair Thanks. Is there problems as payee to pay a personal bank account for a Limited company work?

It's certainly not unheard of to write a cheque to a personal bank account back in years gone by

When was the company incorporated? The details should be on the Companies House website.

I wouldn't have thought a business bank account would take all that long to set up, a few weeks at most.

I'd suggest you get a written/signed instruction from him to pay into his personal bank account. At least that way, you're covered if he then tries to claim you paid into the wrong account or havn't paid the company.

Thanks all, some good advice here. I've remembered that we pay an HR specialist company for this kind of question so have sent them an email. Hopefully they'll give me the correct procedure tomorrow. I blame the fact I'm floored with this horrendous bug at the moment for my brain not having thought of it sooner!

I don't know the answer to your question about your liability as the payer. But when I set up my business account with Starling it took less than 24 hours and it was all done through their app. So you could make that suggestion to your contractor to avoid the worry.

You just need confirmation that payment is being made in to the personal account on trust for the company.

That way there are no employing consequences on you for paying an individual without deducting paye.

Beyond that is on the company not you

Our business account took 6 weeks to set up.
In the meantime customers. Paid cash as long as theyhad their invoice they were happy and we paid in as soon as it was set up.

We then gave accountants the invoices and bank statements for the tallying uo at the end of the vat quarter.

Similar here with Monzo.

I have a limited company. My Starling account only took a day or two to set up. Fwiw I found Monzo a nightmare (app very glitchy) - I'd tried them first and given up!

The online banks set up business accounts quickly but high street banks have lots of delays. Most major banks are undergoing AML remediation currently and this is absorbing an insane amount of resource.

Ask him to invoice you using his personal name I.e. as a sole trader business. E.g Joe Bloggs t/a ABC Electricals. Any paperwork and contract can also be in this name

"@CakeIsNotAvailable how weird, not had one glitch in a year, must've been lucky 🍀