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Poll: Do you have a dedicated bank account for your business? Thread poster: ProZ.com Staff
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This forum topic is for the discussion of the poll question "Do you have a dedicated bank account for your business?".
This poll was originally submitted by Barbara Turitto. View the poll results »
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Marjolein Snippe 
Netherlands
Local time: 15:38
Member (2012)
English to Dutch
+ ...
It simplifies things for me, and it certainly does so for my accountant.
[Edited at 2014-12-09 08:31 GMT]
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EvaVer (X)
Local time: 15:38
Czech to French
+ ...
It is a legal obligation in my country.
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I was audited by the Internal Revenue Service in 1994, at a time when they were forcing independent contractors to demonstrate that they were not employed. The auditor chewed me out for not having a separate account. Now I can't imagine how I ever managed to keep my records straight without it.
(The IRS also expected me to pay myself a monthly salary, which I have done ever since.)
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Claudia Cherici
Italy
Local time: 15:38
Member (2010)
English to Italian
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yes, it is a legal requirement in Italy
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Tim Drayton
Cyprus
Local time: 16:38
Turkish to English
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Cyprus is a business-friendly place where red tape is kept to the minimum and there is no legal requirement for the self-employed to do so, and I don't.
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Claudia Cherici wrote:
yes, it is a legal requirement in Italy
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| My first reaction was that this was a boring question | Dec 9, 2014 |
but the results so far are actually quite interesting/alarming.
5% clearly work cash-in-hand and hoard their money in a shoebox
50% like to make their accountant's life a misery
And only 45% do what I would have expected from 100%
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Tim Drayton
Cyprus
Local time: 16:38
Turkish to English
+ ...
| Making my accountants' lives a misery? | Dec 9, 2014 |
All that my accountants need are my output and input invoices.
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Tim Drayton wrote:
All that my accountants need are my output and input invoices.
OK, maybe not a misery, but it will make their lives harder when doing bank reconciliations (which you will end up paying for), and it will make your life a whole lot harder should the taxman single you out for a spot-check...
And I'm surprised your bank doesn't have something to say about running a business through a personal account.
But maybe things are just different down your way!
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Tim Drayton
Cyprus
Local time: 16:38
Turkish to English
+ ...
| bank reconciliations? | Dec 9, 2014 |
Chris S wrote: Tim Drayton wrote:
All that my accountants need are my output and input invoices. OK, maybe not a misery, but it will make their lives harder when doing bank reconciliations (which you will end up paying for), and it will make your life a whole lot harder should the taxman single you out for a spot-check... And I'm surprised your bank doesn't have something to say about running a business through a personal account. But maybe things are just different down your way!
Bank reconciliations? Never heard of them. Yes, I think things are different down our way. Mind you, if I were in the UK, I wouldn't even bother being VAT registered because the threshold is so high, and so I wouldn't even bother using an accountant.
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Tim Drayton
Cyprus
Local time: 16:38
Turkish to English
+ ...
| You had me worried | Dec 9, 2014 |
I have been a freelancer as a sole trader in both the UK and Cyprus and have never had any involvement with something called bank reconciliation. It seems that, according to the following (with reference to the UK):
"As a Sole Trader, you do not need to complete a Bank Reconciliation."<... See more I have been a freelancer as a sole trader in both the UK and Cyprus and have never had any involvement with something called bank reconciliation. It seems that, according to the following (with reference to the UK):
"As a Sole Trader, you do not need to complete a Bank Reconciliation."
http://community.quickfile.co.uk/t/how-to-record-sole-trader-drawing-and-wages/272
If you operate as a sole trader (in jurisdictions where such a category exists), so that your business income is subject to income tax and there is thus no separation between your business and personal financial affairs, it is perfectly viable to operate through a personal bank account only. Of course, it is a different matter if you set up a company. ▲ Collapse
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| Reconciliation | Dec 9, 2014 |
Surely you check your bank statements to see that the amounts you think you've paid and received have actually been paid and received? Which is all an accountant/the taxman will do. The problem is that after a year or two you can't remember what that random £50 going in or out of the account was for.
Admittedly we trade as a company so things are different, but back when I was self-employed I still had a separate bank account. And a separate office. A bit anal perhaps but it worke... See more Surely you check your bank statements to see that the amounts you think you've paid and received have actually been paid and received? Which is all an accountant/the taxman will do. The problem is that after a year or two you can't remember what that random £50 going in or out of the account was for.
Admittedly we trade as a company so things are different, but back when I was self-employed I still had a separate bank account. And a separate office. A bit anal perhaps but it worked for me.
And I was VAT-registered on a voluntary basis - why pay 20% extra for everything when you don't have to? ▲ Collapse
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Tim Drayton
Cyprus
Local time: 16:38
Turkish to English
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| Mountain out of a molehill | Dec 9, 2014 |
Chris S wrote:
Surely you check your bank statements to see that the amounts you think you've paid and received have actually been paid and received?
Yes, precisely, that is ALL I have to do with my bank statements and I have no problem doing that from personal account statements.
Which is all an accountant/the taxman will do.
I have never had a tax audit but all my bank statements are here if they need to check them. As I have said, all my accountants need are my invoices (plus me to tell them if somebody ever doesn't pay).
The problem is that after a year or two you can't remember what that random £50 going in or out of the account was for.
I have been freelancing since 1999 and, frankly, I am puzzled as to what you mean. As you say, all you need to do is check that the payments have entered the account and that's that. Who cares if years later you can't remember what you spent a particular sum of money on.
Admittedly we trade as a company so things are different, but back when I was self-employed I still had a separate bank account. And a separate office. A bit anal perhaps but it worked for me.
And I was VAT-registered on a voluntary basis - why pay 20% extra for everything when you don't have to?
Because in a country like the UK, if you are not VAT registered, the only thing you have to do is complete a self-assessment income tax form once a year, and you don't need an accountant just for that so you save on accountancy fees and, for another, you are cheaper for non-VAT registered clients because your prices do not include VAT.
Aren't you making a bit of a mountain out of a molehill? In view of the jurisdiction I work from and the size and nature of my business, doing everything through one personal account makes sense.
[Edited at 2014-12-09 15:59 GMT]
[Edited at 2014-12-09 15:59 GMT]
[Edited at 2014-12-09 16:01 GMT]
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Tim Drayton
Cyprus
Local time: 16:38
Turkish to English
+ ...
| What the Guardian says | Dec 9, 2014 |
Here is the Guardian newspaper's advice about bank accounts to people planning to become self-employed in the UK:
"Do I need a business account?
If you are a sole trader you might find you have nothing to gain from opening a business bank account. Many freelance workers pay cheques or have Bacs payments made into their personal current account. This is generally more convenient and cheaper than opening a separate business account. However, it is still important to make ... See more Here is the Guardian newspaper's advice about bank accounts to people planning to become self-employed in the UK:
"Do I need a business account?
If you are a sole trader you might find you have nothing to gain from opening a business bank account. Many freelance workers pay cheques or have Bacs payments made into their personal current account. This is generally more convenient and cheaper than opening a separate business account. However, it is still important to make a note of business income and outgoings for your accounts and tax return.
But if you run a business which involves handling a lot of cash and cheques, your bank might insist on a business account. And if you set up a limited company or partnership that keeps your business finances separate from your personal finances you will definitely need one."
http://www.theguardian.com/money/2011/jul/08/self-employment-financial-services
I agree. It all depends on individual circumstances. There is no hard and fast rule and for many freelance translators the best option is not to open a business bank account. ▲ Collapse
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