Clean It Up
UK Window Cleaning Forum => Window Cleaning Forum => Topic started by: chopsie on November 20, 2009, 09:58:15 pm
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do i need to open a business account and if so why,I have just opened another current account to pay money and cheques from customers into,well actually i was just going to keep the cash for now and transfer over the amount i kept from my other account into my window cleaning account.Is this all ok to do? Why pay for a business account what are the benefits?
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i had a business account and never used it in my previous business, i just kept records of everything i spent and earned, and this was good enough, because if your self employed/one man band, and you spend all the money, i use to just write it down as wages to my self, if any thing didnt add up at end of week
just try and keep some back as tax
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Chopsie,
I know window cleaners of 15+ years who only use current accs. Saves on charges for excess number of cheques, any direct debits etc and some business accs actually charge just for having the acc I believe :o
Tax is a seperate issue and the revenue aren't concerned if you have a 'business' account or not. So long as you have an account you use just for the business and keep your records correct you are fine. That's my understanding anyway.
Hope this helps.
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I think Mike is correct.
a business account is just a separate account to keep your money straight.
It does help having a honest to goodness business account if you need something formal to show you have a real business
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I find a separate account very handy. All my business expenses, tax and vat came out of that account and I get paid a wage into my personal account. Its not essential but it does make keeping the books a lot easier for me.
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try and keep some back as tax? what do you mean,sorry if i am being thick.I have literally only just started this week and have kept records of everything i spent on setting up,fuel and milage on car,I invested in george as it looked like a reasonably cheap way of me keeping track of things,I know people manage without but i really have no idea about book keeping so it made good sense for me to use that
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nathanael,I do have a seperate account but its not a dedicated business account,so surely its doing the same thing? why pay for a business account,what are the benefits?from what i have read,most have very poor reviews and charge just for having them,so can someone enlighten me why a one man band window cleaner,(or any other trade for that)would have one,i am lost ???
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My business account doesn't cost any more than my personal account to service, and there are some extra services attached.
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mine costs nothing as long as i am in credit,what extra services do you get?
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No harm in running it through your personal account mate, to be honest i think its easier, acoidiotant asks to see both my accounts (personal and business) so why have a seperate one and get charged for it. To be honest i wish i hadnt bothered getting one, but it is nice when they say who do i make it payable to and i say LWC, but thats it really, they never said anything when i used my personal name.
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nathanael,I do have a seperate account but its not a dedicated business account,so surely its doing the same thing? why pay for a business account,what are the benefits?from what i have read,most have very poor reviews and charge just for having them,so can someone enlighten me why a one man band window cleaner,(or any other trade for that)would have one,i am lost ???
i know your a one man band but what name do you trade under, ie chopsies window cleaning services, eventually you will get a cheque with that on it. or pick up a small commercial etc. if you have a current account how will you bank that cheque
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To be honest the benefits are small,.. lower lending rates, free business advice, skip the queue and get served in the "special business area" etc etc. If it cost more I wouldn't bother with it!
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i trade as Anthony Smith window cleaner,put on bottom of invoice to make cheque payable to A.I.Smith.Simple really,surely people can't go wrong,and if they do i will have to go back and ask for another cheque.
THANKS for all your replies everyone,I was getting worried i was doing something wrong and it was a legal requirement to have one or something!
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try and keep some back as tax? what do you mean,sorry if i am being thick.I have literally only just started this week and have kept records of everything i spent on setting up,fuel and milage on car,I invested in george as it looked like a reasonably cheap way of me keeping track of things,I know people manage without but i really have no idea about book keeping so it made good sense for me to use that
year one if you do things right you will make a loss on the business :o
but on the off chance you make a large profit, Darling Alistair will want some.
bit of not essential advise, get another account and everything that comes your way from the business, put 33 to 40% in this account, THIS IS NOT YOUR MONEY, it belongs to the business. This is for business expenses, N.I. contributions, tax and the likes. ;)
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I do, & always have, used my normal, joint current account with RBS.
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Chopsie, did you get a call from mrs Meehan?
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no cozy,heard nothing from all those flyers i dropped over there.I will eventually go door knocking over there again but have been concentrating on the areas where i have picked up work already.
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try and keep some back as tax? what do you mean,sorry if i am being thick.I have literally only just started this week and have kept records of everything i spent on setting up,fuel and milage on car,I invested in george as it looked like a reasonably cheap way of me keeping track of things,I know people manage without but i really have no idea about book keeping so it made good sense for me to use that
what i mean by this, is come tax time, when you have to pay it, the tax man expects you to have it ready, he also expects 50% of this years tax as a deposit for next year at the same time, so say you got to pay 1000 tax bill for this year, you ahve to pay 1500 as half is for next year, this was explained to me by the inland revenue, when i got a small busines loan threw the princes trust a few years ago, they set up meeting with them for you, like they said to me, they know you are going to try and rip them off but dont say you earn 100 a week, with a porsche sat on the drive, if you try not to file any tax return for a year, they will take some ones else tax return and they will use this as a blue print for what you earned and you get to pay the same tax as them ie for example you could get dave morris tax return used as your blue print and you will pay the same tax as him
a decent account will tell you what you need to be saving each month its roughtly 25 % of what you make, its better to have more than you need to pay ready than not at all,
i had a mate who was a spark and went vat reg, the vat man owed him more than he owed them, and he was skint the vat man wil pay you what he owes you after you have payed him, what you owe him,
my mate is a partner in a plastering company just him and a other lad, his accountant is so crap, he files 3 tax returns one for the company 1 for him and one for his partner, he had an apprentise for 2 years and didnt even know you could claim for them
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Add to that (tax) 8% for class 4 NI on any profit over 6k too! Luurrrrrvly innit ;D
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They cant use a blue print for someone who has been window cleaning 2 years , with a round just starting to make a wage....
against an established company with 10 men on the books.
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what i mean by this, is come tax time, when you have to pay it, the tax man expects you to have it ready, he also expects 50% of this years tax as a deposit for next year at the same time, so say you got to pay 1000 tax bill for this year, you ahve to pay 1500 as half is for next year, this was explained to me by the inland revenue.
If April 2009 tax bill is £1000, you don't pay that £1000 till Jan 2010...9 months later.
They also want 50% of that £1000 which is £500 at the same time in Jan 2010, this would be 4 months later as it's earnings from Apr to Sept 2009.
Come July 2010 you are due to pay the remaining 50%..£500 tax, earnings from Oct 2009 to Apr 2010... 3 months later.
If April 2010 tax bill is now up to £1200, you already have £1000 "on account" so you just pay £200 in Jan 2011 + 50% of the £1200 and 50% of the £1200 again in July 2011....
So you never pay tax before you earn it, contary to some folk's explanations
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So you never pay tax before you earn it, contary to some folk's explanations
Equally if new people coming into the self employed market remember this......Your first year of trading is NOT tax free.
So at the end of each week or month calculate at least 25% of your takings and put that away in a totally different account which you can't touch other than to pay your tax and NI
That way you won't become one of those we read about this time of year bleating on about not having the money to pay their upcoming tax bill.
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I pay my tax in advance by direct debit every month. It means that the tax man has thousands of €uro of my hard earned money earning interest for him instead of me, so in one way it isn't very clever,... but I find that the scheme means zero stress at the end of the year as there is no big tax bill,.. and no temptation to "borrow" some of the saved tax money every time Alex releases a new pole!
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I pay my tax in advance by direct debit every month. It means that the tax man has thousands of €uro of my hard earned money earning interest for him instead of me, so in one way it isn't very clever,... but I find that the scheme means zero stress at the end of the year as there is no big tax bill,.. and no temptation to "borrow" some of the saved tax money every time Alex releases a new pole!
That's the best way. What you would earn in interest is peanuts anyway. ;)
Peace of mind is worth much more.
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gazza
they can, it make no difference to them, they can only go off what you tell them, even if you spend 1 nite making it up it is better than nothing at all
john,
i was trying to ge the point over that he has to have it saved, as a lot dont in there first year, as they dont seem to think that the tax man will catch up to them in there first year, i just got the dates wrong, long time since i did a first years trading lol like neil said a lot think there first year is tax free, and they get a nasty shock