Business banking for landlords?

by Readers Question

4 years ago

Business banking for landlords?

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Business banking for landlords?

Wanted to pick your brains on business banking. 

I have 5 properties, one I live in and the other four let out.

My accountant has advised me to open a business bank account. Is this the right way forward?

I guess it may depend on strategy, mine is to hold the property’s long-term. Business banking for landlords

I guess business banking is just another monthly cost when you can use personal bank accounts for the same exercise, but for tax purposes I want to do the right thing.

Which business banking do you use?

Is there a specialist one for property management or would an online business bank do the job?

Thoughts please,

Many thanks in advance.

Paul

Comments

Mark Alexander

4 years ago

Hi Paul

I agree in part with the advice given to you by your accountant in that I agree that a separate bank account for your rental business is very important. Where I differ with his opinion is over whether it needs to be a business bank account. I have two personal accounts with my bank for my property dealing, one is labelled Rent Account, the other Property Account. The labels are not relevant, it's the fact that I have separate accounts for different purposes, one for rent and mortgages, the other for refurbs. This makes it so much easier for reconciliation and audit purposes. If your rents and mortgages get mixed up with your personal groceries and other personal expenses you could get into a real mess.

The reason I don't have a business account is that is costs money. The HMRC treat my rental portfolio as investment income so I found a bank which does the same and doesn't charge me for business banking. I am fortunate enough to bank with Coutts & Co. but I'm sure that other banks take a similar view.

I hope that helps.
.

Rob

4 years ago

You don't have to run through a business account, I run mine through a normal account it's cheaper. Buisness account will cost you a lot more especially if things bounce

Paul Still

4 years ago

Rob, Mark

Thank you both, very helpful, yes my personal bank does exactly what a business bank would do and it's free.
Can I also ask, do you both have the properties set up in company's under your name?
Again my accountant has advised I should set a business up and move the property's over?
Thanks in advance

Some One

4 years ago

Four let properties? What's the accountant's reasoning for this? [Engage cynic mode] Is he on commission to get you a business account?

Four rents in, four mortgages out, say one other item every other month per property: ten transactions per month - easily doable in a normal account.

I can't see any point in a business account, although if you really want one I think Santander still offer in credit free banking.

You could set up separate accounts, and slowly move things over as tenants change (rather than risk disruption whilst mortgage payment details change and new rent standing orders get set up).

Whilst doing all this you could probably set up a load of the current accounts that are paying up to 5% for a few thousand in each account.

Mark Alexander

4 years ago

Reply to the comment left by "Paul Still" at "19/06/2014 - 15:37":

This would, of course, substantially increase your accountancy fees - not that I, like all landlords, am the slightest bit cynical LOL

Please see >>> http://www.property118.com/moving-property-partnership-limited-company/66266/ and weight up the advantages and disadvantages yourself. It was an interesting debate!
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Paul Still

4 years ago

Yes I'm a cynic as well, hence the questions!
Ok, thanks again for the advice, I won't be proceeding with the business banking.

Mark Alexander

4 years ago

Reply to the comment left by "Paul Still" at "19/06/2014 - 17:34":

Hi Paul

Of course you're a cynic - you're a landlord LOL 🙂

If you're not a cynic, then you're a very new landlord.

If you decide to change accountants let me know, I will introduce you to a good one - and before you ask, yes he will buy me a drink if you instruct him!
.

Paul Still

4 years ago

Thanks Mark. What is the price your accountant charges for 1 annual tax return for 5 properties? Or maybe easier to send me a private mail with their details and I will mail them to ask. I'll let you know if you qualify for a free pimms..

Mark Alexander

4 years ago

Reply to the comment left by "Paul Still" at "19/06/2014 - 17:52":

Hi Paul

I think it's £100 per annum per property and £299 for the tax return. You can contact them via this link >>> http://www.property118.com/member/?id=452

Not cheap but you get what you pay for, in my case that's tax savings well in excess of what they charge me.
.

Paul Still

4 years ago

Ok, thanks Mark, I'll compare with my current costs and go from there.

Thanks again for the advice above.

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