Limited Company using Sole Trader Bank Account in Same Name

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Long story short:

Had a sole trader business, with a sole trader business bank account which I've yet to use (no transactions). I've decided to now operate as Ltd company with the same name.

So pretty much:
Sole Trader account name is i.e. BOSS
New Ltd company name is i.e. BOSS Ltd

Currently unable to open Ltd Business Bank account, for reasons I'll won't get into right now.

I'm expecting a couple of payments over the next few days.

Legally, can I accept payment as a Ltd company, into the sole trader business bank account with the same name? Worst case scenario, if I cannot open Ltd bank account, can sole trader account be used long term?

I've read that the main priorities are:
1. Having the bank in the same name as the company
2. Having no past transactions (i.e. account must be solely to the company transactions)

But I just want to be sure.

Any professional advice appreciated.

 

[Scalloway]

The limited company and you are separate legal entities so the bank will view your sole trader bank account as being yours, not the company's regardless.

In the short term using the sole trader bank account should be ok, I did the same myself when I set up my company. However if the bank account holds over £10,000 of company money at the end of the financial year there will be tax consequences.

 

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Thank you @Scalloway. So from the "customer invoicing" and Government side of things (i.e. annual accounts) its okay? It should be short term, hopefully!

Saying that, if it does end up longer term - does that mean as long as the sole trader business bank holds less that 10k, then I can just carry on using my sole trader account?

I don't anticipate making anywhere near 10k profit in the first 12 months, as I can only take on very little work at the moment (still working full time + other commitments).

 

[Scalloway]

I understand that if you continue to use the account in the long term you need to get a solictor to draw up a trust deed saying that the money in the account is the company's rather than yours.

 

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Thanks @Scalloway!

 

[eteb3]

Out of interest, what's the reason for the tax consequences if the account has more than £10,000 at year end?

 

[Scalloway]

You pay corporation tax of 32.5% on the outstanding amount. More details here.

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

 

[NicoJ]

Just a slight correction Scalloway, S455 tax is due on an overdrawn account regardless of the amount. The £10,000 limit refers to whether you need to prepare a P11d.

The S455 should, in theory be repaid at some point. P11D tax is not refundable.

Using a personal account is not advisable, its very messy and can cause problems for you.

 

[forevergroup]

Currently unable to open Ltd Business Bank account, for reasons I'll won't get into right now.

My biggest concern is actually this. If circumventing whatever the above is referring to is the main objective of using your personal bank account (that's what a sold trader account is) then that is going to affect the advice that we can provide.

The most obvious problem is that the company is a distinct entity to you and therefore if you retain company funds in your personal bank account then you are essentially in a permanent state of borrowing money from the company.

 

[John Hemming]

Some of the newer financial organisations are much easier to open accounts with. Some have limits on payments, but its worth looking at those organisations.