This guide explains why it is a bad idea to use your company bank account for personal purchases and cash withdrawals
IMPORTANT
If you use your business bank account to pay for things such as your groceries, your bar tab, holidays overseas, or cash withdrawals, this expenditure is viewed as a taxable benefit for you, and the usual rates of PAYE and National Insurance will apply.
This means you lose the tax effectiveness of working through your own company for all funds that leave your business bank account in this way.
Points to remember:
- Your company business bank account(s) belongs to your company, not you;
- Payments leaving your business bank account SHOULD go to either; your own personal bank account, or; paying suppliers (like us for example) for services related 100% to your business, or; The HMRC PAYE / VAT / Corporation Tax offices for tax payments;
- NEVER use your business account to pay for personal items / services;
- NEVER get cash from your business account (unless there is no other possible way for you to pay a business supplier)
If you have any questions regarding this, please feel free to contact us. We are here to offer you support and practical tax advice to ensure you run your company in a compliant and tax effective manner.