Using a separate personal account for a limited company

[ASB]

Just do it it'll be absolutely fine (until challenged).

There is a view that you could execute an appropriate deed of trust which makes it clear that you are holding it on behalf of the company, and it remains a company asset.

Though HMRC wouldn't take it lying down.

About the only reason I can think of every trying it is if it is the only way banking can be arranged. i.e company accounts closed and told to go elsewher or unable to pen one anywhere in the first place.

Just because the money is in a personal account owned by you does not mean it does not the companies monwy - just a lot harder to establish it is without a perfect paper trail.

I can't imagine any reputable professional ever recommending it.

Running a company through a personal account | AccountingWEB
Limited company using personal account | AccountingWEB
Company funds held in a personal bank account | AccountingWEB

[ndoody]

Just do it it'll be absolutely fine (until challenged).

There is a view that you could execute an appropriate deed of trust which makes it clear that you are holding it on behalf of the company, and it remains a company asset.

Though HMRC wouldn't take it lying down.

About the only reason I can think of every trying it is if it is the only way banking can be arranged. i.e company accounts closed and told to go elsewher or unable to pen one anywhere in the first place.

Just because the money is in a personal account owned by you does not mean it does not the companies monwy - just a lot harder to establish it is without a perfect paper trail.

I can't imagine any reputable professional ever recommending it.

Running a company through a personal account | AccountingWEB
Limited company using personal account | AccountingWEB
Company funds held in a personal bank account | AccountingWEB

Yeah, I think from your post what you're saying is we don't actually know - and there isn't any specific guidance on the matter...this is what I'm reading from the "just do it as it's been laid out" posts.

In principle, I'm not trying to break any laws - not trying to make any personal gains per say (etc my "company" getting a better deal as a banking service) and not trying to take anything out that I could spend over and above my normal takings.

And in reality, I'm not trying to break any system - I'm not trying to hide anything from the HMRC and everything would be as transparent as it would a company bank account because there would be full accounts maintained in company filings as if the bank account was owned by the company.

Of course, in practicality the HMRC are a bunch of ******* and they'd do anything to screw me - and as legitimate as it might be they would try to make some kind of case against it I suppose.

The biggest problem is nobody else seems to be asking this question, or trying to do this - so there really isn't any guidance - and I guess no laws against it?

[ndoody]

BTW ASB, thanks for the best answer so far...because those links are handy. I foudn the first link already but didn't see the replies (as I wasn't a member) and that caused me to sign up and see the replies.

It would seem, that actually, there is most likely no problem with using a personal account for business if it was the only transactions going in and out of the account.

[vwdan]

Try looking at it the other way - what the hell are you going to do if you have to enumerate your worth at some point. I'm just picking examples out of the air, but say you end up in a case with the Child Support Agency. Good luck convincing them that the 20k you have sat in a bank account, in your name isn't yours. Replace CSA with anything to suit. It's going to look, quite rightly, dodgy as hell. Also remember that banks will quite happily shunt money about your accounts if you're in the red in one - that'll cause you a lot of grief.

People don't do it, because it's a silly notion - the companies money is not your money and therefore shouldn't be sat in your bank account. And I'd certainly question an invoice with "NBody Ltd - Pay to John Smith [bank details]"

[malvolio]

Yeah, I think from your post what you're saying is we don't actually know - and there isn't any specific guidance on the matter...this is what I'm reading from the "just do it as it's been laid out" posts.

In principle, I'm not trying to break any laws - not trying to make any personal gains per say (etc my "company" getting a better deal as a banking service) and not trying to take anything out that I could spend over and above my normal takings.

And in reality, I'm not trying to break any system - I'm not trying to hide anything from the HMRC and everything would be as transparent as it would a company bank account because there would be full accounts maintained in company filings as if the bank account was owned by the company.

Of course, in practicality the HMRC are a bunch of ******* and they'd do anything to screw me - and as legitimate as it might be they would try to make some kind of case against it I suppose.

The biggest problem is nobody else seems to be asking this question, or trying to do this - so there really isn't any guidance - and I guess no laws against it?

Hint: the ones saying "just do it" aren't being entirely serious...

You and Your Company are two different legal entities. So are YourCo and MyCo so tell you what, you put all your company money into my company bank account: at least it will be in a business account then. Just let me know when you want it back. What could possibly go wrong...

You've had an accountant tell you why it's a bad idea. But hey, if you're determined not to listen, don't come whining to us when all your company income is assessed as being your personal income and you have to pay tax on all of it.

[Alan @ BroomeAffinity]

Not something I'd recommend. That said, I have a client who has company funds "held in trust" by him in an appropriate account so he can offset it against his mortgage. The only transactions were to and from the trading accounts. The client was subjected to a tax enquiry and this wasn't challenged. We had a whole load of paperwork including as mentioned in the link a "deed of trust" but it wasn't even asked for. It should be noted that this was a retailer (before I specialised in contractors) but I am aware of contractors who do this, but the principle applies. I wouldn't be happy with the arrangement for a trading account. Although I guess the principle, which was provided by a lawyer I consulted at the time, that funds are held for you in trust by a bank anyway might still apply. If, as a last resort because a bank account can't get set up, I could just about see the point, but just to avoid bank fees, nah.

[ndoody]

Try looking at it the other way - what the hell are you going to do if you have to enumerate your worth at some point. I'm just picking examples out of the air, but say you end up in a case with the Child Support Agency. Good luck convincing them that the 20k you have sat in a bank account, in your name isn't yours. Replace CSA with anything to suit. It's going to look, quite rightly, dodgy as hell. Also remember that banks will quite happily shunt money about your accounts if you're in the red in one - that'll cause you a lot of grief.

People don't do it, because it's a silly notion - the companies money is not your money and therefore shouldn't be sat in your bank account. And I'd certainly question an invoice with "NBody Ltd - Pay to John Smith [bank details]"

lol, I would never try to devoid my children of getting all the money and support they needed whether I was with my partner or not. I'm not sure I see any other situation in which I have to prove I'm worth less, as I'm not *generally* trying to do anything I shouldn't.

I don't see why you'd have to make any adjustment to an invoice, except for the sort code and a/c number. I could put pay to "rumplestiltskin farted in my face" as long as the a/c number and sort code are correct.

[Alan @ BroomeAffinity]

And the deed of trust to my knowledge hasn't been challenged at tribunal or higher so it is still a risky business. Unless you fancy being the case precedent.

[TheFaQQer]

The question I would consider would be whether if you made any payments from the personal bank account to cover business expenses, would you need to declare anything on the P11D as they are essentially expenses that are being paid for personally rather than by the company.

There are certain expenses, for example pension contributions, which are dealt with differently depending on whether they are paid for by the company or paid for by the employee and reimbursed. If there was an investigation, I wouldn't want to be the one having to prove to HMRC that they were all legitimate expenses paid directly by the company rather than being paid for by the employee (who's name is on the bank account) and then being reimbursed by the company.

Seems to add an overhead in management and paperwork for exceptionally little benefit to me.

[vwdan]

I'm not sure I see any other situation in which I have to prove I'm worth less, as I'm not *generally* trying to do anything I shouldn't.
.

This wasn't my point - the point is you AREN'T worth that £20k, your company is. It's not yours until a salary or a dividend has been paid. So what happens exactly if you do end up in a divorce or a child maintenance situation and everyone thinks you're up by 20k?

I'm sure there's ways to prove it, but it's not a situation I'd ever fancy being in myself. Far better to know the companies money is safely ring fenced both legally and logically.