new client advice please

[helen0722]

My new client has not set up a business bank account because he is awaiting for his new passport which will arrive in two weeks times. He is using a personal bank account on his own name putting purchasing and sales through to that account, I am a bit concern with regards to the sales and purchase, the sales cheques are written to the business name but going through to that personal account.

Would that cause a problem with HMRC?. I will be putting everything on my software and of course will put them under the business names, he's been trading been active since august though the company was registered end of July 2013.

Another problem he has someone working with him and is cashing the money out and pay that employee in cash again surely that would cause a problem? how do I register that payment when I do the book?

Any advice would be appreciated.

 

[StevensOnln1]

Is the business run as a sole trader or limited company? Have the bank agreed to accept cheques written out to the business name being paid in to a personal account?

Sent from my GT-N5120 using UK Business Forums

 

[AndrewEardley]

I would be very surprised that the bank would accept cheques made out to a company name into a personal account (unless the cheque is made out to the person rather than the company) as it would be cheque conversion.

They may have agreed to accept them with an appropriate indemnity in place - but these are very rarely done; instead they will insist on the opening of a business bank account.

Either the cheques are made out to the actual person or the bank have been very negligent in accepting the cheques.

 

[UK Contractor Accountant]

All entries passing through the personal account relating to the company will have to be entered in the books & records of the company with a corresponding entry to Director Loan Account.

There is nothing wrong operating a ltd co without a bank account open - all transactions made through the personal bank account are on 'trust' for the company. As stated above not quite sure how the bank are cashing the cheques made out to the business, but thats there problem.

Employee paid cash - just record on the records as wages and ensure included on the payroll RTI returns.

 

[helen0722]

Thank you StevensOn1 n1 and AndrewEardley.

The company is a limited company, that is exactly my thoughts, I was very surprised when my client said the cheques are made to the Ltd company name and he is putting the payment in that personal account and that the bank agree to this.

I will ask him more questions today when I see him, I have told him to get this sorted straight away. According to my client the bank will not let him open a business account until he renew his british passport but let him open a personal account instead and put payment made to the company to that account, I am quite concerned as when I do the book.

 

[AndrewEardley]

Having worked for a bank for 16 years; I can confidently say what he is telling you is incorrect.

The ID requirements for a director of a Ltd company wanting to open a business account and a person wanting to open a bank account are typically the same.

And without an indemnity in place (which he may well have signed) the bank wouldn't knowingly allow cheques made out to a third party to be cleared through some ones account. From memory cheque conversion is illegal. the bank would also be liable for any loss or claims and so wouldn't be quick to put themselves in that position without some comeback to the account holder

 

[helen0722]

Having worked for a bank for 16 years; I can confidently say what he is telling you is incorrect.

The ID requirements for a director of a Ltd company wanting to open a business account and a person wanting to open a bank account are typically the same.

And without an indemnity in place (which he may well have signed) the bank wouldn't knowingly allow cheques made out to a third party to be cleared through some ones account. From memory cheque conversion is illegal. the bank would also be liable for any loss or claims and so wouldn't be quick to put themselves in that position without some comeback to the account holder

I agree with you 100% I was very surprised that he was putting cheuqes made out to the company name into that personal bank account warned him straight away about that but today shall speak with him some more and get everything out of him. I'm beginning to worry about money laundering I must to a letter and get him to sign it.