Legal status at 14 & Business Banking

[ewan]

I am currently in the process of setting up a small business. I have found a business bank account which I think is most suitable (namely, the business builder account from Alliance and Leicester) but have run into many issues surrounding the fact that I am fourteen.

To cut a long story short, I'm looking for an account to operate small business (projected turnover £1600 in first year). It is basically just an online store, selling imported and wholesale-sourced goods, which I can run alongside school with little hassle. The reason why I'm after a business account is that it can be in the name of the business, and is far easier to use in conjunction with international business payment methods (e.g. SWIFT).

The Alliance and Leicester account that I have been looking at, along with probably all business accounts ask for the legal status of the business. The key problem with registering as a sole trader is that, being fourteen, I obviously cannot set-up the account myself, and cannot register as self-employed myself (what a hassle for such a small operation!). My dad would have to set-up the account under his name and apply for me to be a signatory to the account - able to access the money. He is employed full-time and clearly does not want to have the extra hassle of also being registered as self-employed (which would be quite a contradiction of terms...). Actually, looking into the government's texts, it looks like it is nearly impossible to be both employed and self employed!

I need to find a solution to this big jumble of problems, and may have to resort to asking other banks if I can set up a normal account, fully accessible by myself, under the name of the business. I do need an account which can send payments via SWIFT though, as it is the method through which I will pay some of my suppliers in the far east.

Has anyone ever been in this kind of situtation? Has anyone any ideas?

[Jayne]

Hi Ewan,

Would the bank just let your Dad be your guarantor for your account and you can then register yourself as a sole trader. I'll try and find out a bit more info' if I can.

Jayne :D

[Hayles]

Hi Ewan

Can't offer any advice myself - but although it's pretty quiet here tonight, come back tomorrow and I'm sure you'll receive the advice you need. (Although Jayne will probably beat everyone to it by then! :wink: )

What sort of goods will you be trading?

Hayles

[bwglaw]

Afraid I do not think there is any solution to the problem other than your father opening the account and operating it on your behalf. This is because your father is your legal guardian until you are 18 and until then you are considered as a minor.

If you are expecting to turnover only £1600 a year then I do not think it is really worth setting yourself up in business because many people on Ebay for example are doing it as a hobby. You may have to consider an alternative means of paying your supplier i.e. Paypal etc.

Your father may get away with not being self-employed if you are turning over £1600 because after paying suppliers your taxable income will be nominal.

[Jayne]

Hi,

Found this site, it offers free advice and has lots of good info.

http://www.lawontheweb.co.uk/basics/business.htm

Hope it helps

Jayne :D

[bwglaw]

Useful link above, but I honestly don't think it is worth going down the formal route and establishing legal status, unless you are intending to become an established business that goes beyond a hobby.

[ewan]

Wow, that was quick, thank you all!

I'm going to be asking some of the local banks tommorow if it is possible for me to set up an account either without any particular legal status, with my dad as the account owner and me as a signatory or with me as the account owner and my dad as a guarantor (thanks for the idea Jayne - simple, but I hadn't thought of that before!). I don't really know how they could make my dad legally responsible for any debts etc, but I expect thats what they'd expect.

Hi Hayles, I'm going to be trading various products for the hobby RC and engineering market, namely electrical connectors, wire, and electric motors to start off with. I'm going to be importing £450 worth of motors over from China to start off with, the rest of the stock coming from UK suppliers. I'll tell you when the websites online!

I'm doing the whole thing really just to get experience and have fun, maybe making a few pounds in the process. I have been a customer in the market I'm setting out in many times so I think I can provide a good service. I do want to achieve a realistic business structure though, which would include setting up the right banking methods.

I came across the same site a few days back Jayne, you know what they say... great minds think alike... :wink:

Thanks guys, keep the ideas coming! :)

[Jayne]

I just posted that for the info JB, not a bad site though, is it :D

Jayne

[www.t6c.co.uk]

Obviously you may need to sign contracts so having someone (who you can trust) to have the bank account and sign contracts would the easiest way around it.

If you dont mind me asking what are you looking at doing. Not may 14 years olds start business's.

Good on ya as the aussies would say.

[www.t6c.co.uk]

Sorry, I didnt see your second post which answered the question...

[Jayne]

You seem like a very bright young lad Ewan, I hope you do well with your new biz :D

Jayne

[crus]

Good on ya Ewan.

the experience you gain will be priceless.

Have you spokebn to the Princes trust?

http://www.princes-trust.org.uk/

D

[ewan]

I'll be asking a few banks if an account could be set-up under the business' name, allowing myself access, today. They will most likely want someone over 18 as some kind of contract-bound guarantor, and my dad should hopefully fill that requirement. It would be great if I could still take advantage of the benefits included in an account like the business builder account from Alliance and Leicester though, so I'll primarily be going for that.

Hi crus, I've not yet spoken to the Princes trust. I think even they'll only take on over-18s, see here (http://www.princes-trust.org.uk/Main%20Site%20v2/14-30%20and%20need%20help/start%20up%20in%20business.asp)

[Jayne]

Good luck with the account Ewan :D

Jayne

[ewan]

I'm sad to say that Alliance and Leicester wouldn't allow either the main account holder or signatory to the account to be under 18, which would leave me with no access to the account (short of using my dads card, pin number, internet banking passwords - which I don't think the bank would be overly happy about).

The account really did look the best of all the accounts I have been over so far, so its such a shame they come up with that. I wish they could be pursuaded otherwise just for the one account, any chance of that do you think?

The people on the phone at Alliance and Leicester did mention a community current account which they say they no longer offer, has anyone heard of that before? I think it might have had slightly relaxed rules for signatory age etc.

I've just got to keep searching I guess. Has anyone here got any ideas for accounts which might be suitable?

[Jayne]

Have you looking into a parnership with your Dad?

Not too sure, but I think you can make him a smaller % partner.

I'll try and find out more for you.

Jayne :D

[bwglaw]

No bank is prepared to offer a business account to a minor because it is the law. As I said, the only way round it would be for your father to be responsible for the transactions. There is little point forming a partnership with your father because of the special relationship.

If you open an account for the business then you will have to go the formal route of declaring to the Inland Revenue and pay National Insurance contributions etc. It is really not cost effective especially in view of the turnover.

Just put everything in your father's name and you run the business. He can transfer everything to you when you become 18. You really don't need the red tape on top of your education.

[Jayne]

Thanks JB, save's me searching now :D

Just do what he says :lol:

Jayne

[Adam858]

I started my business at 15, and had a Barclays business account in my own company name by 16. So give Barclays a try, although I don't think they offer the best rates, it was charge free for a year.

Good luck

Adam

[Jayne]

I started my business at 15, and had a Barclays business account in my own company name by 16. So give Barclays a try, although I don't think they offer the best rates, it was charge free for a year.

Good luck

Adam

Well done you.

Welcome to the forum, why not post in the introduction so all can say hi.

Jayne :D

[ewan]

Ok, so it seems I may have to set-up an account which is in either me or my dad's name. Ideally it would be in my name, just a simple single person current account. I do need to find an account though, that has the following points:

1. Can accept payment from NoChex
2. Can be operated by telephone, at the bank, and online
3. Comes with a debit card
4. Can do SWIFT payments out of the account
5. Takes cheques in my name

I think finding one that can do SWIFT payments may be the hardest thing. If its just not possible at fourteen, I may have to get an account with all the other features then just transfer money to my dads account when a SWIFT payment needs to happen.

Can you advise me on what bank would be best for me? [/list]

[ewan]

I started my business at 15, and had a Barclays business account in my own company name by 16. So give Barclays a try, although I don't think they offer the best rates, it was charge free for a year.

I've had a look into the barclay account, and I've got one of their info packs, the rates aren't too good though, as you say. Did you have to register the business? Have you had to pay national insurance or tax on any profits since?

[Jayne]

http://www.co-operativebank.co.uk/servlet/Satellite?cid=1079944047735&pagename=CoopBank%2FPage%2FtplPageStandard&c=Page


Have a look at this, it's the co-op, don't know if it's what you are looking for, but it's worth a look :D

Check out the Giro bank (post office) too

Jayne

[Adam858]

At the time (I'm 24 now) I didn't actually regester myself as self-employed or do anything at all properly, it was just a small venture like yours and I was still at school / college so not likely to have the tax man sniffing around :lol:

I just wanted a bank account in the company name so I could take cheques from my customers.

The company has now grown and evolved, I now turnover about £150K per year, and have 4 staff, so am regestered for VAT and have all the hassle of self assesments etc.

I was in a real muddle when changing over to make it all legal, so if you can, try and get everything sorted before you start, and keep good records of all spending to do with the business, or maybe just start officially as soon as you leave school, but get your business running on a small scale in the mean time.

[Adam858]

Oh and feel free to send me a PM if you need any more help / advise or just a chat, I'm more than happy to help. I remember how frustrating these little legal problems were.

[gordonthegofor]

I have been both self-employed and an employee of another company at the same time. My understanding of tax system is that a person under 16 would have to pay tax on their income above the personal allowance but there would be no national insurance liability.
Including your father in your business could complicate this.
If you are not borrowing money, paying for goods on delivery, I don't see where the problem is.
The tax office would explain what liabilities there are if you ask them. http://www.hmrc.gov.uk/home.htm.
Make sure you have the right insurances, particularly public liability

[ewan]

PM sent Adam, has it arrived ok?

[Adam858]

Yes, just got back to you, Im on me holiday at the mo so may not be able to respond quickly, although I do have one of those new vodafone 3G cards in my laptop now, so I've just replied from my hotel room...

I've had a couple of Stella's so I hope it all makes sense!!!!

:lol:

Cheers

Adam

[ewan]

Brilliant advice Adam, you rock! :)

[ewan]

I looks like an appointment with Barclays is on the cards for this week.

Out of interest, does anyone else on this forum do trading through Alibaba?

[ewan]

Good news, I've now got a business start-up account with Barclays :)

[Faith28]

Dear adam and ewan,

I really admire people who have the courage to get on with it at a young age. So well done to adam for 'making it' and ewan (who can use the former's experience).

I am 28 and wish I too had starterd earlier. Sorry if this is off track but just wanted to express my admiration for you both. I am a teacher and I love it when my pupils come up with some unusual ideas that do not conform with the majority...they're being creative. Unfortunately they don't always see that due to the 'system' holding them back. Ewan don't get put off by anyone.

Your forecast seems conservative but I haven't seen your business plan so cannot make any judgement - but I can't help but feel you will be very successfully if you stick with it.

I too am looking to the east to utilise the lower cost but good quality goods we can obtain and pass on to business/individuals in the western countries.

I have worked for over a year doing provisional background research and you can see clearly that the manufacturing industries are making a shift to the East BUT the creative industries in the West are booming.

Make the most of the world economy and be on top of it. You will make your fortune this way.

So in my case I use printers abroad to make card games and publish them for the gaming industry. At the same time I am training myself to use up to date packages like Adobe CS2 to create designs for my cards and others to balance both industries - i.e. creative and manufacturing.


Take care
Eiman Munro
Sole Proprietor of Loop Card Games

[Jayne]

Well done Ewan, nothing to stop you now. I'm really chuffed you have finally got a bank account for your business :D

Jayne

[ewan]

Thank you Jayne & Eiman lots for the encouragement :)

I'm trying not to be too optimistic, afterall any successes would be even more welcomed then :D

[Adam858]

Ewan, glad I could be of use! Give me a shout if you need any more help with anything at all.... Do ya recon Barclays will give me some commission. ;)

Faith, not sure I've actually 'made it' yet, but it certainly beats a regular job! Sure I can see light at the end of the tunnel now though.