Business bank account?
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  1. #1
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    Default Business bank account?

    Hi,

    So, my other half is annoying and pretty much claims that he knows everything just because he is self employed! My questions are about setting up bank account when being self employed etc.

    Do I need to get a business bank account or can I do a normal bank account but keep this separate from my personal account?

    Also, according to the other half he is saying to protect myself I should go as limited.

    Honestly i'm just so confused as to what is best and I don't want to make any mistakes! Whenever i ask for his advice i get told the same thing and "this is what you're doing" which is of no use to me right now!

    Thanks xx

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    I have been a childminder for more than 20 years and never used a business bank account ... I write on / highlight my bank statements every month to clearly show my business vs personal income.

    While there are some benefits to tax thresholds for limited companies it is very unlikely you will earn enough as a childminder to make it worthwhile... Limited Company v Sole Trader

    I hope that helps!

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    When I did a business course for childminders I was told its best to have a separate account for your income but it did not need to be a business account. From the little research I did on business accounts the bank charges for the privilege and a lot of the extras I couldn't use anyway. Mines a normal no frills no charge current account.

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    No need for business account. No need for separate account either- personal choice. I use my joint account, all incomes and expenditure is in my accounts book so no problem. I like to be able to spend and set up standing orders etc from our account without having to transfer money across from a separate CMing account.
    I know a lot of CMers and have never heard on one being a limited company- our turnover is just too small to justify it.
    As for protecting yourself- protecting yourself from what? From non-payment? What will protect you from non-payment is a clear contract signed before care starts, take a deposit to stop time-wasters, and money up front per month, a 'no-pay-no-care' policy so you don't get drawn into 'oh but my tax credits are late I'll pay you next week, honest'. You can hold a deposit too to protect yourself.

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    In very simple terms, a limited company is so called because its liabilities are limited to the assets of the company plus a nominal amount ( usual £1 or so) which represents the token investment of its directors. IIRC there needs to be a minimum of three directors. Those liabilities are the only ones a creditor can claim upon if the company goes bust. Hence the owners/directors of a limited company are protected in terms of personal assets, as anyone to whom the business owes money cannot claim upon their house, belongings, personal savings, etc.

    This just isn't going to happen with CMing. The most anyone is likely to claim for is a personal injury claim (which is why we're all required to have public liability insurance) or a deposit/fees taken in advance if you fail to provide care as contracted. It's not like being a trader who, say, buys a load of windows, doors, guttering, whatever, which they then fail to sell by the time the unpaid supplier starts waving a winding up order in their face.

    As you won't gain any "protection" by being a limited company, there's no bed to go through all the additional accounting and listing paperwork and expense it entails.
    Last edited by bunyip; 22-01-2017 at 02:12 PM.

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    I have a separate bank account for cm, but it's a normal current account not a business one. I just find it easier to manage my money by keeping it separate, I transfer myself a 'wage' every month into my personal account and keep a little bit back to save up for the cm bills like insurance and Ofsted and for anything I need to buy.
    But very much personal choice as others have said.

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    Quote Originally Posted by ChocolateChip View Post
    I have a separate bank account for cm, but it's a normal current account not a business one. I just find it easier to manage my money by keeping it separate, I transfer myself a 'wage' every month into my personal account and keep a little bit back to save up for the cm bills like insurance and Ofsted and for anything I need to buy.
    But very much personal choice as others have said.
    I do the same as ChocolateChip

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    There is no point having limited liability as we don't buy things 'on account' or generally allow parents to pay up to 3 months later (we have a legal team to sort that out if they try )
    There are other reasons people do go ltd, but generally, childminders have no need to do so.

    I do have a separate account for parents fees to be paid into (a normal current account), just because it makes it easier for me than for any other reason. Like CC, I then transfer money from that account to my bills account so I know my bills are covered.
    There is no requirement, other than possibly the banks own t&c's, to have a business account, and as you pay fees to pay in and fees to draw out with a business account, I fail to see the point.

    I've been self employed in various forms over the last 25+ years, so long as you can evidence funds into the business (invoices, spreadsheet, and the like) and funds out of the business (receipts, bills etc), and you file your tax return accurately and on time, that is all HMRC are concerned with

  9. #9
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    Thank you everyone for your help so far! My other half is registered self employed and therefore states that by going limited I'm protecting the house and my assets in case anything should happen, but then again I've told him about the public liability insurance which I have to have but got told "that won't matter against your assets so should go limited".

    Unfortunately because he is self employed he thinks he knows best!

    Thank you so much I really appreciate it. Think I'll go for a normal separate current account so that I can keep all childminding things in one place and I can then transfer myself a wage whenever needed.

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    Ask your DH to elaborate. As for "in case anything should happen", precisely what sort of "anything" is going to:

    A. Involve a claim against your house
    And
    B. Not be covered by your £10m worth of PLI.

    .??????

    Lost teddy? Ripped anorak? Mud on jeans?

 

 

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