I just got a statement from my bank today indicating the commision due to them for use of my business account. It has doubled. Not because I'm making much more money but because the fees and tariffs have gone up.

My business is simply not big enough to justify these kind of hikes.

Which leads me to ask how you guys handle the money your students pay you ? Does it go into a Business account ? have you noticed any major price hikes or does your bank offer something that is more affordable to a small business piano teacher ?

The woman at Barclays recommended I get my student to pay me online. I feel this would be a hassle on them though and chances are it would put them off. Does anyone use this method of payment? Should i maybe consider switiching banks ?


I realise this is a slightly personal topic but i really don't know who else to ask.

A few of my students pay me by bank transfer and it works very well.

Hi maggie, cheers for the reply. This issue has really ruined my monday morning

Can i ask do they transfer money after each lesson ?

is it easy to keep a track of who owes you what ?

The one thing I'd advise you is to start shopping around other banks. If yours is charging too much, see what offers you can get from their competitors. Every big bank and building society will have their own small business service.

Is there any reason you can't use an ordinary deposit account or current account which is just for your business use? The bank doesn't need to know this. Surely all that matters is that you keep your accounts tidy?

Look at the Post Office too. My husband used to manage an independent shop, and they had a business account with one of the Big Four. This account charged for paying anything in.

So the shop would do daily banking with their post office account (no per-transaction fee), and then weekly they would do a cheque from the PO account to the main account. There was some reason they didn't do all the banking with the post office, but I can't remember it.

Mind you, I've just realised this was 15 years ago so perhaps things have changed with the PO!!

I bill them for half a term's lessons and they do the bank thing online during the next couple of weeks or so.

They need to give the transaction some kind of identifying feature- the surname of the student usually is enough. I had one whose bank for some reason did not enable her to do that - I used to have to make sure the invoice was for a non-standard amount so I could spot it. I don't think this is typical btw - have not had that problem with any other student. You need to know the family or student well enough so you feel confident of providing them with your bank details - needless to say I wouldn't do it right at the beginning with someone I didn't know.

or yes - shop around !

Actually, me too - I just use an ordinary current account.

I looked at opening a proper business account a few years ago - and the banks were mostly so unhelpful that I didn't bother ...

Some years ago I walked into Lloyds and asked about opening a business account. The man there said I'd need to get my husband's permission

Seconded. I've just changed my current account - pure greed on my part, switching from 0.1% interest on my current account to a whopping 8.5%*. The transfer was easy peasy lemon squeezy; my salary and direct debits were transferred automatically. I don't have anyone paying me via standing order, but this would have been a simple case of notifying them of the new details. It was up to me when and if I closed my old account, so I waited until I was satisfied that all cheques from it had cleared, and that everything was now operating from the new one.

*If anyone else would like to earn this rate, PM me for details. If I recommend the account to you and you then open it, we both get £25 as well. Everyone's a winner!

I just use a current account at Barclays.

Tasha

Before I was born, my mum tried to open her very own current account. The bank manager asked if the money she'd be depositing was money she'd saved from the housekeeping her husband gave her

Well i called the bank and asked if i would be charged for transferring moeny from my current account to my business account...they said i wouldn't.

So i then wondered whether i just credit my current and transfew it straight away. I would like to keep the business account as it is good for the debit payments (expenses) that come out of it. i called a business advice line that i used to work with and they said that the bank MAY kick up a fuss if they see that I'm avoiding paying directly into the account.

Thanks for the swift replies guys

Most building societies offer free banking to small businesses. That might be worth checking out (pun intended).

Even if you are a sole trader rather than a limited company it is a good idea to keep business and personal banking separate, and show clearly the drawings of your personal account on the business account. It makes it much easier to keep the taxman off your back.

<-- waiting for 16 Aug

Personally it never occurred to me to have a separate business account, any more than I would have my salary paid in to a separate account and when I was starting up and got advice from the Inland Revenue I don't remember them recommending opening a new bank account. I realise things are a little more complicated if you're self-employed, but surely most people just end up transferring almost all monies credited to the business account straight back into their personal account to pay their mortage / rent and other bills.

When you are asked to provide your business accounts it is so much easier when the transactions are entirely separate from your personal ones. It also makes it absolutely clear what your business actually costs, and what profits it makes. Finally it makes it easier to see what costs are claimable against tax. Generally speaking - it just makes everything simpler.

As it can cost nothing to organize it is worth doing.

May be worth looking into... (although I've never been asked for business accounts in eight years of being a full-time music teacher)

yeh thats what i was always told - and have been doing so for the last 6 years or so. The fact i have relocated and the rise in tariffs though is aking me think otherwise though.

I think for the time being I will pay into my current account and then immediately transfer it to my business (which is free). In the meantime I'm going to shop around...what a hassle


Also, it may not cost anything to set up a business account...but believe me after the 6 / 12 / 18 months of free banking is over it soon will cost you. Barclays now charge me £5 a month to just have the account and then all the extras made my last 3 months of banking come to £63. This is double what it was for the previous quarter (where about the same about of transactions were made)

I've been in business since 1991 and had my account with Midland/HSBC for the first 13 years. They wrote to me and said they were putting my fees up and they cheekily did despite a strongly worded letter I sent back. It was costing me over 100% more to stay with them, so I voted with my feet and now have an account with Alliance and Leicester Commercial Bank. They give me free banking as long as I put in at least £1000 per month. I get internet banking etc etc.

Having a separate account is really important in case the Inland Revenue want to investigate you.

I hope you find an account that suits you, with a branch nearby in case of problems.

I'm another who uses a current account to manage my business (Royal Bank of Scotland). It's never any hassle, and allows my students to pay me in whatever way they prefer.

do you think maybe i can just open another current account with Barclays and use it for my business ?

I don't actually see what benefits I get from having a business account as such

Most banks don't allow personal accounts to be used for business, though they only enforce the rules when the business is obviously a significant concern, and ignore one-man concerns with small (in the banks eys) turnover.

I'd say you'd be better off opening a free business account with a Building Society and using that for your business. Unless you can negotiate a deal for a free business account with your bank - on the grounds of small turnover and that you do your personal banking with them. They all do the first year or 18 months free, but you want free or nominal cost forever!

I think the building societies make their money by taking longer to clear payments (I could be wrong on that) or perhaps they just want the goodwill so that you'll go to them for your mortgage or ISA, or car loan or whatever. Also the BS's don't offer such wide-ranging, quick, and easy facilities as banks, but most of what banks offer to businesses is of little interest to an independent music teacher anyway.

I just use an ordinary building society account, and keep my own record of where I put my cheques. Sometimes for convenience I put them in my bank account. But I only have about 10 pupils at home so it's not a big deal whereas if you have 20+ you might feel the need to keep much better records.

Hubby and I do the same as JohnS - we did use our Barclays current account for a few years, but they got really shirty about the number of cheques we were depositing, and wanted to charge per cheque which would have cost us a fortune. Having the seperate business account makes life much easier with the Inland Revenue, and A and L only charge £5 for any month that you don't deposit £1000. We've never had any trouble with A and L business banking and I would recommend them.

I don't regard my teaching as 'business'. A business account is for people who have employees to pay, overheads (rental for a shop perhaps) and have an annual turn-over because they work in retail, buying and selling, promoting a product or whatever.

I'm self-employed yes, but just because I feed my account with separate cheques rather than a monthly BACS salary from a regular job doesn't qualify me for a business account. I just make sure that all the income is only from teaching so as not to confuse my accountant or the tax man.

If you are self-employed the Inland Revenue will regard you as 'in business', as will most banks if they discover you are depositing cheques from self-employed income, rather than one pay cheque a month from an employer. We discovered this in time - if you are also depositing personal cheques (birthday cheque from a great auntie etc) into the same account, you could end up having to pay tax on it should the Inland Revenue bring your name up for a check up. Aside from that , you are promoting yourself as a teacher, and like it or not, your teaching ability is your 'product'.

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I think for the time being I will pay into my current account and then immediately transfer it to my business (which is free). In the meantime I'm going to shop around...what a hassle

Also, it may not cost anything to set up a business account...but believe me after the 6 / 12 / 18 months of free banking is over it soon will cost you. Barclays now charge me £5 a month to just have the account and then all the extras made my last 3 months of banking come to £63. This is double what it was for the previous quarter (where about the same about of transactions were made)
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Until reacently I was self employed as a personal trainer - so similar volumes of payments (mostly by cheque) I had a business bank account with Abbey and it was all 'free for life' as long as you remain in credit. I don't know if it still is, but I couldn't affout to pay the charges being touted by the 'big 4'
Do look around. If you do ever get a tax inspection it will make you look more organised, and should make the process less stressfull - without upsetting any 'tax men/women' out there - in my view a visit from them has to be worse than doing an exam!.

I agree; I don't see why an ordinary instrumental teacher paying in a few cheques a couple of times a term needs all the facilities of a business account. The Inland Revenue don't specifically recommend this (as far as I'm aware) and it seems a bit the same as councils not generally regarding private teaching as a business (I think).

I've had the same chartered accountant for 20 years and I have asked him from time to time whether I should have a business account and he deemed it unnecessary. The Inland Revenue have me registered as self-employed - all National Insurance up to date and everything and they accept my tax return every year. As for the bank - they know I'm a piano teacher and they accept my cheques without a problem. Only occasionally I get a call from a call centre asking if i would like a business account - they have never insisted. I know not to put in 'non-teaching' cheques - presents go in a savings account or the joint household. Perhaps if my income goes over a certain amount I might have to review my system but it's working at the moment




Absolutely - otherwise I would have to move house tomorrow!!!

I have seen this confirmed in writing and there are only problems if neighbours complain (I think and hope!!)

The business guy i spoke with today told me about the Abbey account and it sounds good. Do you get to handle your account online at all ?


Also, one of my students dads runs a business where he employs other people...he's been doing it for 20 years. I told him about the problems I've had today and he told me he's only ever used a current account for his business.

So i think i might see if Barclays can set me up a new account that I will just use for my self-employed income and if they refuse I will look into what other banks or building societies have to offer.

Some great responses - thanks guys

Yes Abbey is mostly online - you can use branches for depositing stuff etc. but they prefer you to do most stuff online as thats how they can keep thier charges low.

I have had an Abbey Business account for the last three years - it's entirely free of charges provided that you stay within very generous (for music teachers!) limits. You can operate it online if you wish, but you don't have to. Cheques/cash have to be paid in via the Abbey's own cash machines. You get a monthly statement. I would strongly recommend an Abbey account.

Thanks Suepea - I might just look into that Abbey account.

I think if barclays won't give me what i ask for (free banking ) then i will go to abbey. It will be nice to keep all my accounts with one bank but if they can't match what Abbey are supposed to then it simply makes sense to move.

I've been teaching for 20+ years and never had a business account. I have incoming and outgoing books that is satisfactory for IR.

Halifax and Nationwide are very good. The Halifax also has a machine that allows you to place cash ( not coinage ) and cheques in your account without going to the counter. Best thing about this is that copies of each cheque are printed out....you have a record, including the sort code and account number, and it's very handy if a cheque "bounces".

well i spoke to Barclays and Abbey today.

Funny how when you threaten to leave you start to become their most important customer. My business manager has agreed to open a new current account and to transfer all my business funds into it, thus avoiding any banking charges.

The only thing putting me off Abbey is that i can't deposit coins.

I'd love to know how much money I could have saved over the last 6 years by not having a business account in the first place. The only benefit that Barclays could draw my attention to was that i get a Business manager.....today was the second time I've spoken to him in 6 years

Do you get a good rate of interest on the current account? Thing is I like making money out of the banks instead of them out of me!

Now why would he suggest you need a business manager to run a one man band teaching practice?