Opening a Business Account

[Driftwood999]

I an involved in a very small business that has developed from a hobby. Now is the time to separate personal and business expenditure. My question is, is a business account necessary or is it perfectly legal to just open another current account with the business name and therefore avoid charges after the 2 year free period? There is no need to have any of the Business facilities such as overdraft, loan or advice, just separate records. Thank you.

I don't think its a legal requirement. I'm not sure if they still do, but I opened a business account with Abbey (now Santander, hence not sure) which is free banking.

There's no legal requirement to have a business account, but I doubt a bank would open you a "personal" account with a business name. You could though open an account in your own name, that you use exculsively for the business.

If the bank see business type transactions going through, they will ask you to open a business account though. Only really likely if you're banking large amounts of cash or sending/receiving several cheques or payments a week.

You'll need a business account if you want to accept card payments.

Thanks for the replies. Really wanted to establish the legal situation. Our son opened a separate current account with his bank yesterday for this small business. He said they gave him a hard time about it, but they went ahead and allowed it. He texted me to say "It's against the terms of service to use a personal account for business purpose" So I was worried. All that is required is to keep the business expenditure separate from the personal. We don't owe the banks any favours and just need reassurance that a "Business" account is really just another product, which would incur fees that can be avoided at this stage. I do understand that the bigger and more complicated the business, the more likely you are to need a business advisor etc. Thanks again, your comments and experience are very welcome.

Oh yes the card payments make sense in relation to a business account, but at the moment payment is by cheque or cash.

Any cheques would have to be made out to your name not the business name, and if the bank become aware of it being used as a business account they can make you open a business account instead, or they can close your account as it's breaking the terms of the account. Most banks offer free business banking for first year or 2 so you can always swap banks after the free time ends.

My business account name is my own personal name, so I had no problems there. I did get questioned by the cashiers though if I paid more than a couple of cheques in at a time.

Natwest offer free business banking for the first 2 years - our account is with them and they have always been great.

I am with Santander and they offer free business banking. Or they did when I opened it a couple of years ago and it does still look like they do (although I can't claim to have checked on the details fully).

Or, if you're a member of the Federation of Small Businesses (FSB), you can open a Co-op bank with free business banking.