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No bank account for limited company

No bank account for limited company

Due to bad personal credit history director cannot open a company bank account. He is hoping to start trading in a one man company shortly.

If he uses a personal bank account solely for the company could we 'treat it' as if it was a company bank account. Thus saving possible problems with directors loan assessment on the bank balance?
Dean Logan


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29th Apr 2004 16:22

Credit history
As regards "bad credit history", it is quite possible to have had some black marks made against you during this time of recession in the IT industry: a couple of missed or late mortgage payments, missed storecard payment, unable to pay back company overdraft instalments due to lack of trade income.

So it doesn't necessarily follow that the client is a "bad 'un" - maybe actually desperately needs the company turnover to get back on his feet again.

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By puzzel
13th Mar 2004 00:09

Banks love personel accounts
The reason a bank will provide a personel account over a company bank account is simple. If the company goes bust there are usually little in asset value to claim against. But on the other hand, if it is a private account there is your house and contents (assuming that you own them)
As for money laundering through a private a/c for a Co purpose. Any accountant worth his weight in gold would see if anything was amis.

"Oh dear me, my cliemt has recorded an expence of £10.00 and has not provided a receipt. What shall I do"

Get real, if you have been in this business for a few years, you will know how to handle such situations and you will notice a variance in any substancial transactions. Don't start acting like a fish out of water. Report the real situations as they arrise, otherwise it will be a vast amount of work for no real reason and not forgetting at a tax payers expence.

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11th Mar 2004 20:05

Response to David
Thanks for the comment. Yes, I agree the risks would be high and I certainly was not suggesting that the client would be able to operate a client account directly (signature retained by the firm), precisely because of the risks. After all, the key money laundering safeguard is to know one's client, which is why I was also indirectly suggesting that Dean might wish to walk away from this one.

But, in the right circumstances, this might be a possibility.


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By puzzel
10th Mar 2004 00:21

Acting in good content of the Co
Am I wrong or does no one understand law any more?
I was always lead to beleive that a director acting on behalf of a company with good intent of towards the company was able to make any legal agreements or arrangements.
Providing all accountability is directed to the Co, there seams no reason why the Co cannot proceed trading and on the sales invoice provide a not that payment should be made to a third party.
This happens on a regular basis with factoring or discounted invoicing (dirty words in my book, would not tuch them with a barge pole).

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09th Mar 2004 16:26

Bank or not to bank
I think it is to easy to forget the original question.
If someone as a "Person" as made himself not credit worthy, then why should some creditor trust him as a director.
I am on the side of the poor sod that gets caught by this idiot

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10th Mar 2004 09:38

Other possibilities?
If the company is called 'A. Client Ltd', then maybe the bank would open an additional personal account designated as a business account.

If the anticipated volume of transactions is small and overdraft facilities are not required, then perhaps an accountant or lawyer who is acting as company secretary might be willing to operate a client account on the company's behalf?

As others have said, the key to any arrangement is the meticulous record keeping which the company will need anyway, to ensure there is no mixing of company and personal funds.

Have you been able talk to the bank manager? What does the business plan look like? Do you need this client?

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By Anonymous
10th Mar 2004 08:34

The Life of Brian
Let he that is without sin throw the first stone.

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09th Mar 2004 17:26

Alternative solution
Some of the Building societies will operate a "Treasurer's Account".

This will allow cheques and BACS payments to be credited; the only drawback is that the only way to make a withdrawal is by visiting a branch.

Hope this helps!

John Lyons

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07th Mar 2004 11:19

There is nothing in the Companies Act that says a limited company must hold a bank account in its own name. However the director must be able to segerate transactions to ensure proper accountability.

I have also asked this question with Companies House and they agree that one is not a legal requirement.


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By gbms
08th Mar 2004 02:17

Legally right but on dodgy ground
Companies Act, s 221 requires accurate accounting records to be kept, which must contain day to day entries of monies spent and received. The Act does not prescribe the form of the accounting records, but directors have to guard against their falsification (CA 85, 722). Failure to keep proper accounting records could lead to imprisonment (CA 85, s221).

From a practical point of view, if you are running a business then it makes sense to have a separate business bank account. In an Inland Revenue enquiry, the inspector would be quite within his rights to ask to see all your private bank statements if that was the way you ran the business. A separate company bank account would make this more of a problem for the Revenue - but would give the department more confidence that the business was being managed properly.

There may be tax problems also with regards to notional dividends (ICTA 1988, s419) where the money paid into a private account could not be separately identified.

From a money laundering perspective (important as from 1 March 2004), doubts could be raised that where the company does not operate its own account, receipts paid directly into a director's private account could raise suspicions of tax evasion and generate a report to NCIS.

So whilst Companies House may be relaxed about no company account, I would not be.

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09th Mar 2004 15:20

How are cheques paid in?
If a personal account is used, how would cheques made payable to the company be paid in? If the individual is Mr A B Smith and the company A B Smith Ltd, there is less likely to be an issue (although technically there is still a problem) but if the company name is completely different then wouldn't the bank refuse to allow the cheques to be paid in?

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