Limited company and bank accounts and issues

[3 MORE YEARS]

I have a small business. It is a limited company. I am not looking to make it grow. As its a brand new business I was considering setting up a bank account for it in the name of the limited company.

However, I already have a business current account which was set up as a sole trader current account (a long time ago), which I never used. Could I just use that instead? Do you see any potential legal or other complications by not having a bank account in the limited companies name?

Taking this argument to the other extreme, let us say if I have a personal account which was purely used for the limited company, would that be an issue?

I am asking this because I have more than one limited company and I don't want to open another bank account unless I have to. Thank you.

 

[Scalloway]

If the bank account is not in the name of the company then there are potential tax consequences as it means that the company has lent money to the director.

https://www.gov.uk/directors-loans/you-owe-your-company-money

 

[3 MORE YEARS]

I didn't think if it was an account used only for business it could be viewed like this. I better just open a business bank account in the companies name then.

 

[Scalloway]

The company is a separate legal identity from you so it needs its own bank account.

 

[dotcomdude]

If you accept personal responsibility for anything that happens in the bank account, and just effectively mirror those transactions in your limited company accounts, I can't see that anyone is going to have any issues?

Better to have an account for the company, but much more hassle...

 

[Lisa Thomas]

You must not use a personal Bank Account for the Company's affairs.

The Company needs to open its own bank account.

 

[MyAccountantOnline]

If you accept personal responsibility for anything that happens in the bank account, and just effectively mirror those transactions in your limited company accounts, I can't see that anyone is going to have any issues?

......

If only it was that simple

 

[urstop]

I started as sole trader and after few years moved to ltd company, my bank closed my sole trader account and opened a new business account for the ltd.

 

[littlelottie20]

You must not use a personal Bank Account for the Company's affairs.

The Company needs to open its own bank account.

Hi Lisa, What are the consequences of using personal account as we did this for the first year of our LTD company as I was purchasing stock before starting the company and using savings from the personal account. It was used solely for business. We now have a company bank account.

 

[STDFR33]

Hi Lisa, What are the consequences of using personal account as we did this for the first year of our LTD company as I was purchasing stock before starting the company and using savings from the personal account. It was used solely for business. We now have a company bank account.

https://www.gov.uk/directors-loans

 

[littlelottie20]

https://www.gov.uk/directors-loans

Hi STDFR33
Many thanks for that but we have not taken any money from the business when it was using this account. It was used primarily before the business existed to purchase stock in preparation.

 

[STDFR33]

Hi STDFR33
Many thanks for that but we have not taken any money from the business when it was using this account. It was used primarily before the business existed to purchase stock in preparation.

By being in your name, and not the company's, you did take money from the company.

 

[UK Contractor Accountant]

By being in your name, and not the company's, you did take money from the company.

Not so much of a problem if overdrawn

 

[DontAsk]

I started as sole trader and after few years moved to ltd company, my bank closed my sole trader account and opened a new business account for the ltd.

After almost 3yrs as Ltd, we still have the sole trader account with the same bank.

It's a bad idea to close it straight away as customers paying by bank transfer WILL continue to pay into the old account, no matter how many times you remind them.

 

[littlelottie20]

By being in your name, and not the company's, you did take money from the company.

As I said the company did not exist then so it couldnt of given me any money ! I purchased stock beforehand from my own money and I then gave the company a loan on start up via directors loan account.