Business banking

[cook]

By the way, Cater do not insist on £5K being put into their account if you go from the pcg website.

[cook]

Sorry to write 3 posts in a row - I'm in a 'stream of consciousness' mood today.

Thought it might also be useful to mention that another good approach is to set up 2 bank accounts - one with free banking for day-to-day banking and one with high interest for savings / surplus.

BTW, the free PCG guide to freelancing PDF is a good start for these sort of questions.

[Nixon Williams]

Sorry to write 3 posts in a row - I'm in a 'stream of consciousness' mood today.

Thought it might also be useful to mention that another good approach is to set up 2 bank accounts - one with free banking for day-to-day banking and one with high interest for savings / surplus.

BTW, the free PCG guide to freelancing PDF is a good start for these sort of questions.

Why confuse your business with two (or more) accounts when one simple one will do? Cater Allen (and some others) offer a good deal for contractors. In my experience most of the high street banks do not cater for this market and you would be better off elsewhere.

Alan

[Ardesco]

I would expect most people to have 2 accounts it must be said.

Standard day to day account and a savings accunt.

When you get paid whack the VAT and the tax/NI you would have to pay if IR35 caught into the savings account and then live off your day to day account.

If you ever get overpaid you can also chuck that in the savings account until you get asked to return the money insuring you get a nice rate of interest on it while you are holding it

Every 3 months pay the VAT man out of the savings account and at the end of the year pay your tax bill out of the savings account and be please that youhave a nice chunk left over.

I personally find that separating the tax from the day to day account makes it easier as you don't have to remember to keep x amount in your co account, and you can't really slip up and take too much out.

Then again each to thier own, but I think the company savings account is a grat way to go.

[Pondlife]

When you get paid whack the VAT and the tax/NI you would have to pay if IR35 caught into the savings account and then live off your day to day account.

Agree entirely.

[Nixon Williams]

Whilst there may be some exceptions few banks offering "savings" accounts pay more than Cater Allen on their current account.

Provided you only take what is advised in salary, expenses and dividends there should be enough in the account for the taxes.

That is how we work, it is simple, easy to follow, saves on bank charges and you can earn a better rate of interest.

Then again we do have one client with 16 bank accounts so perhaps some people like complication!

Alan

[Bear]

Completely agree with Alan

It really isn't that difficult to keep track of what you need to pay out in VAT and taxes. I have a simple spreadsheet that tells me the minimum balance I must keep in the business account.

I then have my accountant as well.

Cater Allen accounts have a tiered interest rate so it pays to keep it all in one account.

[Ardesco]

I agree it is not difficult to know what you need to pay out, but you can occasionally forget about a cheque that has not been presented promptly, or get a surprise if you have any direct debits set up on the account (for phone bills for example).


If you segregate the VAT/TAX/NI by putting it in a separate account you will never get caught out (especially useful with VAT, as if you can't pay them you are really in the tulip...)
Not something you need to do, but I find it can be useful being the forgetful eccentric that I am

[cook]

Sorry - mistake in my above post. The free banking with Cater is through contractoruk, not pcg: http://www.contractoruk.com/money/fr...k_account.html

I agree that only one account is best if you can get decent interest and free banking. Cater seems like a good deal.

[cook]

BTW, there is also no minimum if you set up a Cater account through Nixon Williams. They will also set up your company for free. (I am really kicking myself now).