Someone found the blog on the term ‘what bank should I use as an instructor’?
The answer is simple: It doesn’t matter who you bank with.
All you need to be able to do is pay money in and get it out when you need it. As a sole trader, you really don’t need a business account (which usually has a monthly fee of attached to it, and extra fees for depositing cheques), but if that’s what you want then it’s up to you. Some banks will try to insist you have a business account if you bank with them, but my advice would be to find another one unless you’re happy to be charged for something most will provide to instructors and sole traders for free,
Personally, I bank with Halifax, and all my money goes into and comes out of the same personal account. The vast majority of my driving instructor income goes in either via my card reader or as cash deposits. Slightly less often, it goes in via bank transfer or via a direct PayPal payment. I never accept cheques as lesson payments now.
This article was originally written quite while ago, and at the time cheques were the only source of payment problems I ever had. I can’t ever remember any ‘bouncing’, but how they were filled in quite often meant they weren’t honoured by the bank and I had to get a replacement (creasing, smudging, and incorrect or incomplete information were the usual culprits). This was made worse by the bank’s Victorian efficiency, which meant failed cheques might take weeks or months to get back to you, and you’d have to chase them up. In at least one case, the pupil had passed their test and was no longer with me. It created annoying administrative issues getting it sorted, and cheques have no immediate value until you have banked them. Nowadays, the banking apps let you scan them, but they still get rejected if the signature is smudged, and the three working days to clear if they’re accepted.
About 10-20% of my turnover is still cash, and I can easily accrue as much as £1,000 in my wallet, so I still have to physically pay money in occasionally.
I have to be honest and say that Halifax is utterly crap at branch level. For a start, there aren’t many branches left, and those that there are will be located in busy pedestrian areas. You have to find somewhere to park, and in West Bridgford that means having to pay (the traffic wardens hunt in packs, ready to pounce on anyone whose ticket has a crease in it or is placed crookedly on the dashboard). In Arnold, you might find a roadside parking space, but otherwise you have to pay there, too. West Bridgford town centre during the day is like a geriatric village of the damned, and even if the car park has spaces, there’s a good chance you won’t be able to get to any of them because of elderly and disabled drivers blocking the road waiting for a disabled bay to become available, or trying to avoid buying a ticket while they wait for their partner to come back from shopping. In the afternoon, mummies in Chelsea tractors do the same as they pick their kids up in the car park, or wait for a space nearer the shops instead of driving 20m round the other side where there’s lots of empty places.
If you do manage to park and get into the Halifax branch before it’s random early closure on random days, the size of the queue at the till (and the complexity of the transaction each member of it is trying to complete) is inversely proportional to how big a hurry you are in. There’ll be women with pushchairs whose kids are running around screaming, people with bags of coins, those making withdrawals as if they’ve never heard of a cashpoint, and several elderly people with bank books who behave as though they’ve never done this before when they get to the till (and who immediately go straight to the cashpoint to make sure the money has gone in, and often to take some out again).
The number of cashiers on duty is not proportional to anything. They only ever have one unless the number in the queue is approaching three digits. Then they still have one. But sometimes two, although that isn’t proportional to anything either.
On the now-rare occasions I have used the cashier, the simplest possible act of paying cash into your account takes five minutes. This, too, isn’t proportional to anything. It just takes five minutes – possibly a bit longer if you have a lot of cash and what they count isn’t the same as what you counted. The vast majority of that five minutes is taken up by their printing device, which takes nearly that long to chisel your receipt on to small clay tablet of a non-standard size somewhere between a business card and a coaster.
Of course, there is the Fast Deposit machine. This miracle of technology does exactly the same thing as the cashier, and it even takes exactly as long as the cashier. All without involving the cashier at all. Brilliant. Except that Halifax branch staff have been encouraging as many people as possible to use it to try and keep the queue for the till inside the building, and this also meant training people how to use it. Christ, the first time I used it I did it with no help and just followed the instructions. I was also in possession of the knowledge that anything with rollers (like scanner and photocopier feeders) tend to respond badly to staples and paper clips, and this thing would be similarly vulnerable, so the clear warning label not to put staples and paperclips in it was unnecessary. However, people are stupid, and the machine is not working at least half the time because some prat has got a staple jammed in it, and the branch staff can’t fix it themselves and have to call in an engineer (which takes a week).
But even when it is working, if there’s more than one person waiting to use it, you’re no better off than standing in line waiting for the cashier. It was that which led to my last ever visit late last year.
I went in, and there was the usual queue of at least eight people for the single cashier. There was only one person at the Fast Deposit gizmo, but it quickly became clear he was having a financial discussion of some sort on his phone. He had several cards and a thick wad of cash. He wasn’t actually using the machine, but he was going to, and the supernumerary cards suggested the money wasn’t all going into the same account. So he was effectively three or more people – all of them f***ing stupid – all by himself. I stormed out – I swore audibly – and when I got home began looking for another bank.
If I’d have calmed down a bit, I would have realised that it was going to be the same whoever I banked with if I needed to visit a branch. Years ago, while I was with HSBC, I went into the now closed branch in Keyworth, only to get stuck behind a local farmer who was paying in hundreds of pounds in coins! And whenever I used to go in NatWest or Barclays, the cashier getting up and disappearing in order to deal with whatever the idiot at the front of the queue was trying to do would make my blood boil. But it was while I was angrily looking for a new bank that I discovered I was now able to pay into my Halifax account at the Post Office (several years earlier I’d checked, and at that time I couldn’t).
At first glance, this might not seem the panacea it has turned out to be. The kinds of people who frequent Post Offices are typically a hundred times more stupid than those queuing at the bank branches. I mean, I recently got stuck behind someone in a Post Office (Clifton) who was apparently an eBay seller, and they had at least 30 small packages, each of which had to be individually bagged and labelled for some unfathomable reason, even though most would have readily fit a Post Box opening (when I sell on eBay, I bag and label at home, and only use the Post Office as a drop off if they won’t fit in a post box). Another time, in a different branch (Farndon Green), the elderly Postmaster-cum-village-shop-owner was having a chat with an elderly customer. They both stared at me as I entered, and carried on with their conversation. I nearly walked out. And another time, in still another branch (Tollerton), I went and stood at the Post Office counter whilst the shopkeeper (and his wife) dealt with customers at the shop counter. It became clear he was conducting the Post Office from the shop counter, and more people had come in. As I went to walk out, he said ‘can I help you?’ I replied ‘no, it’s OK’ and left. I will never go in that place again. But the major advantage of Post Offices is that there are a lot more of them than there are bank branches, parking is usually a doddle, and there is always one either very close to home, or along the route as you are driving between lessons. And paying cash or cheques in at a Post Office is quick – I am usually in and out in less than two minutes.
Why don’t you accept cheques?
There is no need. Anyone who uses cheques to pay for stuff will have a cheque guarantee card, and these days those things are chip & pin cards. Since I can take card payments, a cheque is a pointless complication. The only possible benefit is for someone who wanted to defer payment by however long it takes for me to bank it, plus however long it takes my bank and theirs to process it. If I didn’t pay it in immediately, there’s an increased chance that they will be skint again by the time I did. For me, there is no benefit at all, since it forces me to risk a rejected cheque and all of the hassle that follows.
Other instructors take cheques
That’s because they can’t take card payments, meaning that unless they get paid in cash (including driving the pupil to a cashpoint to obtain it), or do it by bank/PayPal transfer, a cheque is the only alternative. Getting pupils to pay by bank or PayPal transfer is a hassle in itself, as is driving to cash machines a lot of the time (especially when they’re out of order or there’s traffic). When mine do it by transfer, I often have to keep chasing them because they ‘forget’. I’ve got better things to do,
What if people can only pay you by cheque?
That’s a complete non-issue these days. The number of people in the entire country who are truly in that position could be counted on the fingers of one hand. If they can write cheques, they will need a cheque guarantee card, and that doubles as a chip & pin – which I can accept directly. If the bank won’t give them one, there is probably a damned good reason for it, and I have no desire whatsoever to find out why by accepting non-guaranteed cheques from them.
I can handle cheques. I choose not to as a routine method of payment because there is no good reason for them except to delay money leaving someone’s account.
Why bother with a card machine?
It’s quick, and I get paid immediately. There’s no chasing, and no risk of loss to me. Since I started using such a device nearly I have taken several hundreds of thousands of pounds with it (and yes, it all gets declared when I do my taxes, as does any cash I take). It also means I have good records for tax purposes. Frankly, I wish everyone would pay by card, but it isn’t uncommon for people to have their own reasons for insisting on cash – even if it involves as much as £700 for a complete course!
Isn’t it illegal to use a personal account for business transactions?
No. You only need a business account if you are a limited company. Sole traders – such as ADIs – are operating perfectly legally if they use a personal account. The only reason for choosing a business account would be that it is separate and might keep things simple for when you do your tax return – but it isn’t that hard in the first place for instructors.
Note also that some banks don’t like it if you use a personal account this way and will expect you to open a business account – and close your personal one if you don’t. That’s between you and the bank’s policies, and not a legal issue.
HMRC will audit you if you use a personal account
That is completely false. I’ve been doing this job for a long time and I have never been audited. I wouldn’t be worried if I was, because my accounts are clear (and true). HMRC are far more interested in you if your numbers don’t add up properly – if your profit ratio isn’t what it should be, or if your declared turnover doesn’t ring true, for example.