How long should a business bank account take to set up?

[StartingUp-123]

I started my sole trader business in early April this year. I applied for a business bank account with the Co-Op. I would get free banking as I am a member of the FSB. I sent the forms on March 30th having been told over the phone, on two separate occasions, that it would take 4-6 weeks. The forms were quite detailed and I had to include a business plan.

After 6 weeks I had heard nothing so I started phoning them to try to get some progress. At first they just said that my application was proceeding. I do need to start putting my earnings into the account and paying suppliers.

The Co-Op agreed to escalate my application last week, but then started raising objections. In my business plan I listed the equipment and training that I had paid for pre start up. They wanted proof that the money for this had not been laundered. They asked me for bank statements showing the money going into my personal account. I emailed these (they said scanned documents are ok) and had to chase them up to find out that the bank statements are not enough, they need a solicitor's letter saying where I got the money, which was an inheritance.

They told me this at 4pm on Friday. The solicitor is away till Tuesday (bank holiday weekend) and I will have to pay for the letter. And I have suppliers to pay. According to the Co-Op all this is necessary due to changes in the law about opening business bank accounts.

Anyway, I then phoned NatWest for details of their business bank account. I was told that I only need id and proof of address. A business plan is nice for them to see, but not necessary. And if I go to an interview with their business manager, the application can take as little as a week.

Do you know if the NatWest advisor is correct? If he is, I will probably drop the Co-Op application and go with NatWest.

By the way, my business is a simple services business, I am a sole trader and am not asking for finance.

It's annoying because the free bank account with the Co-OP was my main reason for joining the FSB at this stage, otherwise I would have left it till I have more money coming in.

Thanks in advance for your help.

 

[Paul_Rosser]

I had an issue when trying to open a business account with Lloyds so went to Natwest and we had the bank details within 3 days and the cards within a week. This was during their big IT meltdown in 2012 so really impressed with how quick it was.

After the 2 years free banking ended we moved to their fixed price £5 a month business account which covers all electronic payments/deposits and you just have to pay (a £1 from memory) for cheque deposits, which we have very few of so is great value.

 

[StartingUp-123]

Thank you Paul, it does sound like Natwest would be good.

But I am concerned that legislation may have come in since 2012 that makes the process take longer. Does anyone know about that? Has anyone opened a Natwest business bank account in the last year or so?

 

[Paul_Rosser]

Don't know about any additional legislation in place since then, so hopefully someone will be able to advise.

Do you have a personal bank account? The wife got a business account setup in under 48 hours with her regular bank.

 

[StartingUp-123]

I do have a personal account. I was under the impression that having two bank accounts with the same bank was a bad idea because if one is in arrears, they can take money from the other. But I hope that won't happen.
It's certainly worth considering.

 

[StevensOnln1]

The legislation you're referring to is the Money Laundering Regulations which require anyone providing financial services to check the identity of whoever they are providing services to. The reason for requesting the solicitors letter will be to confirm that the money has come from your inheritance and that you aren't trying to hide money that has come from some sort of illegal activity.

 

[StartingUp-123]

Thanks StevensOnln1.

The inheritance money was originally paid into my personal bank account over the counter using a solicitor's cheque, so my personal bank checked that it was ok. I have bank statements showing this. Ought this to be enough? In your opinion, are the Co-op correct to ask for further proof?

 

[StevensOnln1]

Paying in a cheque does not mean that any checks were carried out on the source of the money. Bank statements do not usually show where a cheque came from, just the amount deposited. Unless it was paid into an account held with the Co-op I doubt they would waive their requirement for the solicitors letter.

 

[StartingUp-123]

Thanks, all very useful info.

 

[myfairworld]

As a Sole Trader you could use your existing personal bank account for business transactions which would get you off the hook about the payments you need to make. Yes, yes people will immediately say that is a bad thing to do but it is perfectly legal! Some banks will not like you using your personal bank account in this way (some don't mind) but the computer will not 'notice' such use until it has gone on for some while and by then you will have a business account up and running and have stopped using your personal account for business transactions in any case. Just print off your personal bank statements, mark every business related item with a highlighter pen and keep that copy as part of your business records.

I have had an FSB business account for some considerable time. I recently changed the name of my business and came up against the same problem you are experiencing even though I wasn't opening a new account with the Co-op just changing the trading name. Bizarrely - I felt - the bank would not consider the application for the change until I could produce more than one type of evidence of trading in that name such as invoices from suppliers, website address, etc. It all gave my accountant a good laugh and something to add to his collection of the eccentricities of banks. Then when the application could go in, it then took weeks rather than days for the change to be accepted and acted upon and did become a problem. Apparently my answers to a multi-page form were being quality assessed or something. I can understand this because of money laundering + the Co-ops ethical policies and I've always banked with the Co-op precisely because of their ethical policies, the FSB account was a bonus which came later. It was exasperating from my point of view though as my business is the ownership & management of a fair trade shop which should from the Co-ops point of view tick all the right boxes and nothing was changing about the business except the trading name.

You could of course try phoning the FSB and asking for their help which was what I was on the verge of doing when the Co-op suddenly decided everything was okay.

 

[StartingUp-123]

Thanks myfairworld. I may end up having to use my personal bank account just to pay one invoice which I have already had for a few days. But phoning the FSB for help is a good idea too.

 

[alistairm]

I just set up an account with Lloyds. The whole process took about 5 weeks but was very straight forward. I spoke to someone on the phone for about 5 - 10 minutes mid way through so they could clarify a few details with me but that was it.

 

[StartingUp-123]

Thanks alistairm. I've already been waiting nearly two months though! I don't think they even looked at my application until after I started phoning daily.

 

[Red Wood]

2/3 days

 

[StartingUp-123]

Red Wood, I hope you are right!!

 

[Red Wood]

From personal experience my friend!

 

[Paul_Rosser]

The legislation you're referring to is the Money Laundering Regulations which require anyone providing financial services to check the identity of whoever they are providing services to. The reason for requesting the solicitors letter will be to confirm that the money has come from your inheritance and that you aren't trying to hide money that has come from some sort of illegal activity.

If it is then they have been around since before 2012.

 

[Rupertx]

I applied for a new business bank account for a brand new Ltd company with HSBC recently. It took about a week for them to do their form checking and then call me to arrange a business manager interview. Had the interview a week later and was approved at the end and then it took about another week to ten days to get the debit card and all my internet banking set up.