By in Business

Business banking or not?

Finding a bank that will provide a business account

You wouldn't think that it would be difficult to find a bank that would provide you with a business account facility would you? Especially if you had banked with them as a personal customer for 20 years, had no mortgage and no dependants and didn't need a loan or an overdraft?

In the UK, with the current recession, the government is telling banks to be friendly to small business start ups. But this doesn't seem to apply to internet marketing. As an internet marketer, I will be working from home, so I want to keep my personal address as safe as possible but the bank wants me to display it on my web site, so it's credible to customers. They also want me to add my phone number. Banks are supposed to know about security - but it appears it only applies to themselves. I can get around the phone problem OK, I will buy one of those cheap pay as you go phones. That will do the job and I can put that number on my web page with no problem.

The bank says it will provide me with a bank account if I have one of the following:

  1. a letter from an accountant mentioning my business name
  2. a letter from a solicitor mentioning my business name
  3. a letter from an insurance company providing insurance
  4. an invoice from a company providing me with goods or a service to my business name

As a very small, nascent business, I do not have a solicitor or an accountant. I will be doing well to cover my costs in my first year, never mind paying out large fees on accountancy and legal stuff that I don't need at present. I have tried researching insurance but the insurance companies don't want to know about affiliate marketing. (I suppose they think the company providing the goods or service will be covered.) And I don't need to buy anything concrete (except maybe the phone) and they don't want an online piece of paper - but that's how I will be doing my business!

It's catch 22. I need a business bank account to pay for any goods I will buy, so my business name is on the invoice but I can't get a business bank account until I buy goods with my company name on the invoice but my personal bank account cannot do that!

After all that kerfuffle, I am beginning to think of moving my personal bank account to a bank that WILL provide me with a business bank account.

Any business bankers around?

Image Credit » Image mine (c) MegL

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LoudMan wrote on July 14, 2014, 7:26 PM

Banking is way more complicated than it needs to be.

indexer wrote on July 14, 2014, 7:40 PM

I have had the opposite problem. I would dearly love to have a personal account (free of charges), but my bank insists that I have a business account (on which charges apply). I have to have a business account because I am registered as self-employed, which means that I pay National Insurance at the self-employed rate - otherwise I would have to pay at the employed rate and have it deducted from the tiny salary I get for working four hours a week. I therefore have to maintain the fiction that I am running a business called "Welford Writer", which is merely me writing posts and articles on sites like PP and Bub***s! The bank (Lloyds) said nothing about having an accountant or solicitor or obtaining business insurance - none of which I have.

Ruby3881 wrote on July 14, 2014, 10:21 PM

Maybe it's a silly question, but what exactly do you need to buy? If you're working online and already have your computer and such, you ought to be able to operate without investing in equipment.

I don't know much about the ins and outs of banking for business, especially in the UK. But if you can get your clients to pay by PayPal of internet money transfer, you ought to be able to protect your privacy without having to open a business account at the bank. Unless you are making enough money to be declared self-employed, or you register a business, you're really not a business. You're an individual earning additional (not related to employment) income.

Ruby3881 wrote on July 14, 2014, 10:21 PM

I just wish Canadian banks offered personal accounts with no fees!

AliCanary wrote on July 14, 2014, 11:08 PM

Oh goodness, what a lot of bother. Maybe you could get a box at the post office? But all those other requirements seem, as you say, contradictory. I would definitely advocate seeking a business account elsewhere, and I am sure they would to ave your personal account, as well!

4evertolentino wrote on July 15, 2014, 1:20 AM

It is hard to start up a business! Lots of requirements! Well, good luck to you!

MegL wrote on July 15, 2014, 7:11 AM

I won't have to pay National Insurance because I am already retired and no longer have to pay it. My personal banking bank offers free business banking for 18 months and I thought that would give me enough time to try it out, to see if I can make a go of it. Maybe I should try Lloyds, after all the problems it has had recently, maybe they will offer me an account. By the way, I have another personal account in a different bank too but it's a joint account and I don't want to mix up personal and business accounts.

MegL wrote on July 15, 2014, 7:14 AM

I don't actually need to buy anything, nothing concrete anyway, mostly hosting and domain names. Clients will pay by Paypal, no problem. I am a business, I bought a company name because I wanted to set up and run legitimately but it isn't exactly easy!

MegL wrote on July 15, 2014, 7:16 AM

A box at the Post office is an option for clients to write to - you are correct. I didn't bother getting one because Companies House, where my business name is registered, will not accept PO box numbers as addresses, they need a concrete, land-based address.

Ruby3881 wrote on July 15, 2014, 12:07 PM

Hmmm. I don't know what "bought a company name" implies, exactly. But I would imagine the bank would accept your government issues tax number, if that's something companies get in the UK. I believe that here in Canada, registering a company name is more a sort of protection for the name than any kind of mark of legitimacy.

I remember an ex having to register his name as a company in order to do some freelance programming work, back in university. He paid $25 and filled out a paper at city hall. That was it. But because he used his name as the company name, there was no need for a business account at the bank. And like you, he didn't need to rent office space or buy equipment. He just received the payments in his own name (because this was well before PayPal!) and paid whatever expenses on his own.

It sounds like you're heading in the right direction, but might need to hold off on the next steps until you're earning more money. Keep really good records, and back everything up. Look into UK tax laws for self-employed persons and small businesses, and see what might apply to you right away. If it all seems way down the road, it's probably best to treat your company as an extension of you until such time as you want to incorporate/create an LLC, hire a tax accountant, etc. That will then give you the access to a solicitor's or accountant's letter :)

CoralLevang wrote on September 18, 2015, 2:57 AM

Some look at it as a sole proprietorship, so open a second personal banking account to deal with the business side of their personal life. It's been awhile since you wrote this, MegL , so I imagine you have already gotten through the conundrum that banking seems to dump on those of us who need it. emoticon :winking:

MegL wrote on September 18, 2015, 3:11 AM

I have FINALLY managed to open a business banking account with the bank I was writing about above. In the UK, sole proprietorship is not the same as a company. My latest annoyance was with PayPal on the business front, which I am thinking of writing an article about because it frustrated me so much!

CoralLevang wrote on September 18, 2015, 3:47 AM

SP is not the same thing as a company, but it is a business option here in the US.
LLC is one way that one can bridge between SP to a corporation.