Stage 4 - Running the business bank account

Pisces post 4

The money that is in the company bank account belongs to the company, it does not belong to the directors or shareholders until it is paid out of the company bank account in to a personal bank account. For that reason it is important to use the account for only business expenses and to not use it to pay for personal expenses. 

When you are paying wages and dividends from the account it is helpful to use the payment reference ‘wages’ for the wages and ‘dividends’ for the dividends. This ensures that they are correctly categorised in the accounts and that you pay the correct amount of taxes in your self assessment and on the company tax return as well. 

Paying as much of the business expenses from the business account will also make life easier since it will remove a lot of the work involved in keeping records of personally paid expenses that need to be refunded from the account to the directors or employees. 

It is important to remember that the company is a separate legal person from the directors and shareholders and that it is easier to keep the monies separate. It is preferable to keep the payments to the directors, employees and shareholders to a maximum of three payments per month – payments of wages, dividends and expenses. Setting up payment templates in the bank account for doing this would make that they are always quick and easy to pay. 

Software, Pisces, BeginnersAlan Oakes