Being asked to upgrade to business account

[seraphims_odditorium]

Hello, 

this is my first post so please be kind. 

just looking for advice please.

Today I received an eBay email stating : 

“

Your selling activity indicates you’re operating as a business seller.

In order to comply with government consumer protection legislation, we ask that you upgrade your eBay account to a business account in the next 30 days. If you don’t, your account will be subject to selling restrictions, as outlined in our Business seller policy.” 

but I am not & have never been a business seller. I have sold our junk basically!  - unwanted kids toys, clothes etc etc  & more recently some of my late father’s items (he collected film memorabilia). 

at no point have I made or purchased any items to sell as a profit. So I’m not sure why this is happening or what to do ? 

[game_raid]

eBay has to report all accounts not just business sellers.

[*vyolla*]

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@game_raid wrote:

It is recommended to have a separate bank account to make it easier when doing the accounting, it is as simple as that.

They is no legal stance that you can not mix transactions, if so please share a link, you say it's well known and I'm open to be proved wrong.

A LTD company needs a business account because they are a separate entity to the business owner.

This does not apply to sole traders which most eBay business sellers will fall under and totally optional on which account they wish to use.

---

I agree, I didn't add the small business eBay account to the business bank account because it sells such a small amount so is easier to keep track of linked to my current account, it would totally cause confusion if added to my higher volume business accounts.

I've just spoken with my accountant - it's not a legal requirement by the law of the land or HMRC or any online site to have a business bank account linked to a business online account if you're a sole trader, but it is at the banks discretion and, in their small print, it will likely say that if they consider you to be trading as a business they can ask you to open a business account with them. 

So, unless anyone can supply a bona fide link to a reputable source (not Google or FaceBook please) then I'm inclined to believe the accountant (particularly as eBay have never mentioned it).

[vintique*violet]

I do not have a link but If anyone is running a business then they should've sourced the information for themselves. 

So in addition to my other post to make it a bit clearer.

Ltd companies ( Businesses) have to register with companies house and hold a business bank account. That is a legal requirement. 

Whilst current accounts can be used - these should not to be mixed with personal and business dealings... every Bank has their own terms on this so you would need to check. This is for banking and HMRC purposes. 

I may be a private seller on eBay but I used to run a business and followed the correct protocol and have had many conversations with an accountant and HMRC. 

Sole traders " legally" are not required to have a business account,   but if they ( sole traders) use a current account this should not be mixed with personal banking for accounting purposes and again, banks have their own protocol and most do not allow " business" transactions on a personal current account.  Some banks will allow two " current" accounts but it would be shown that it is for business purposes. 

It is up to the individual to check this. It is best business practice to open a business bank account to separate from personal as whilst there are fees for transactions, it also can offer other ranges of services, such as lending ( should it be required to expand your business)...Many have a separate  current account because they " trade" in their own name if they are not using their own name, then that needs to be registered as it is a business. ( This is different to just using a " handle" on eBay platform) 

If eBay are allowing business account sellers to register with just a current bank account and the businesses are not sole traders then that is not following legislation. 

Hope I have made it a bit clearer.

Also isn't it ironic that people are touting about Private " business sellers" on the platform avoiding fees and yet those running a business using a current account also are avoiding business banking fees...just a thought. 

[vintique*violet]

Please see my updated post in which have made it clearer. 

[*vyolla*]

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@vintique*violet wrote:

Please see my updated post in which have made it clearer. 

---

So, it's as I though,  eBay don't require sole trader business sellers to have a business bank account. 

You haven't posted any link to any legit legislation, by the way. 

[vintique*violet]

Hi @*vyolla* 

Like I said "legitimate" business are required to have a business account  ( ie LTD companies and be registered at companies house) 

Current accounts are usually for personal finances... 

If you have a current account used for business then this is normally at the banks discretion ( many banks do not allow)  and it would be noted ( by the bank) that it is used for " trading"... 

Sole traders can use current accounts but advisable to have a separate one to personal banking transactions to make it clearer for HMRC and accounting... I have spoken with HMRC about this quite some years back and they insisted I opened a business bank account for my " trading" activities and because occasionally I would use " casual staff"... It makes sense to do so.  Banks are pretty switched on anyhow and if current accounts are used for business and the " transactions" vary and perhaps become much higher than usual , they will query this. 

A few odd plants or items would not be considered a business anyhow and it is best to keep separate from any other business activities, so using a current account in that instance would be fine,  if that makes sense. 

[game_raid]

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@vintique*violet wrote:

Also isn't it ironic that people are touting about Private " business sellers" on the platform avoiding fees and yet those running a business using a current account also are avoiding business banking fees...just a thought. 

FWIW I have a LTD company which has its own business bank account, which does not have any banking fees, so it's quite a statement to claim that I and others may be avoiding banking fees by using a current account, you even mention it is not a legal requirement for a sole trader to have a business account and certainly not a requirement on eBay.

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[vintique*violet]

Legitimate registered businesses require a business account... That is those who are registered with HMRC and companies house. 

Sole traders ie one person trading can use a current account providing their bank ( in their terms and conditions) allow this, many do not, you would have to check. 

What link or legislation are you looking for? 

I have clarified what I mean on the other post... I mistakenly thought everyone would understand what " legitimate business" means. 

[moldosgifts]

Not sure what you mean by legitimate being a sole trader is a legitimate business the same as a registered LTD business. Sole trader owns their lability a ltd company doesn't.

[vintique*violet]

Would be interested to know of that bank 😉 

as always had business banking fees to deal with apart from the early days when it was " free" for a couple of years I think? 

Any opinion or claim of mine is not directed at anyone personally... it is just an observation. 

If Businesses on eBay are running as a "legitamate" business , yes they require a business bank account. 

And yes sole traders do not ( unless they want to differentiate ) 

[vinylscot]

Coincidentally, I had a meeting with my accountant over lunch today. He has just left.

Basically, as of a few minutes ago, he says the vast amount of information in this thread is utter nonsense.

A limited company does not even need to have a bank account, although it makes things like accounting, and building a credit reputation much easier. It is theoretically possible still to run a business solely on cash, although not many would.

In my past, I worked for one of the big high street banks. Where on earth are people getting the idea that businesses can't have current accounts? In my experience (and my accountant's), almost all businesses will run current accounts. Mine certainly does.

As stated above, it is obviously more sensible to separate private and business matters where it comes to finances, but, again, it is not set in stone that you must. Proper records must be kept, and it would obviously make accounting more complicated (and expensive) if you decided to use one account, but, if that's what you want to do, just do it.

eBay, and other entities can insist on certain requirements, e.g. having a bank account, registering with them as a business, and it is their right to pick and choose who they want to deal with, based on their own requirements.

However, many posts here are confusing eBays requirements with legal requirements. They are often two very different things.

[ett1954]

"eBay has to report all accounts not just business sellers." - That is so, however questions would certainly be asked of a seller who was registered as a business on eBay but not with HMRC should they have exceeded the £1000.

Genuine private sellers would have much less worry, whilst businesses trading illegally will probably be registered with HMRC, so they will have nothing to worry about.

[*vyolla*]

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@vintique*violet wrote:

Would be interested to know of that bank 😉 

as always had business banking fees to deal with apart from the early days when it was " free" for a couple of years I think? 

Any opinion or claim of mine is not directed at anyone personally... it is just an observation. 

If Businesses on eBay are running as a "legitamate" business , yes they require a business bank account. 

And yes sole traders do not ( unless they want to differentiate ) 

---

So post #9 isn't technically correct then, which is the point I made:

Businesses are usually registered with HMRC,  and are required to hold business bank accounts. 

You cannot have a current account for a Business account - so are they expecting you to also open a business bank account? This opens a huge can of worms! 

[vintique*violet]

Just to clarify my post... " legitimate" business is what I am speaking of here.. ie Ltd or LLP partnership registered at companies house and HMRC. 

Plus any business " sole trader" will ( or should) be registered with HMRC anyhow ... 

[game_raid]

Starling Business accounts offer 0 fees, they have paid tiered levels which can offer accounting tools such as submitting VAT returns and so on and work similar to xero and quickbooks but for a lot less, it is not compulsory to upgrade your tier but it only costs £7 a month for those that want the extra features.

There may be a fee for cash deposits but most online sellers won't be depositing cash.

[vintique*violet]

Legitimate businesses ie those registered with HMRC Companies House etc are required to hold a business account.. 

Yes I misspoke or miswrote if you like as I didn't include " sole trader" who "legally" are not required to hold a business banking account... although it is advisable to keep separate from personal transactions and to check terms and conditions of your bank as most banks do not allow " business" transactions. 

[vintique*violet]

Thank you,  @game_raid Never heard of them but will take a look. 

[vintique*violet]

"eBay has to report all accounts not just business sellers." - That is so, however questions would certainly be asked of a seller who was registered as a business on eBay but not with HMRC should they have exceeded the £1000.

Genuine private sellers would have much less worry, whilst businesses trading illegally will probably be registered with HMRC, so they will have nothing to worry about.

See below... 

For residents of the UK, eBay is legally required to report both your sales transactions and certain personal or business information to His Majesty’s Revenue and Customs (HMRC). eBay will report this information should you meet either of the following thresholds within the calendar year:

• Your total sales on eBay is equal to or more than £1,740 after deducting fees and commissions or taxes
• You complete 30 or more sales transactions on eBay (cancelled transactions are not included in the calculation)

Your total sales for the year are calculated based on the full amount received for your sales transactions excluding:

• Shipping amounts paid to eBay
• VAT collected and remitted by eBay
• VAT charged on fees
• Amounts deducted by eBay for fees, coupons, cancelled or deleted orders
• Returns

I would love to know how those figures were determined... many private sellers could sell far more than 30 items a year especially if they are clearing their home prior to the sale of a property or a bereavement etc.  Plus private sellers selling their own personal items would not be subjected to income tax, unless ( thinking out loud here) it is to " catch" undeclared income with anyone on benefits? And I think capital gains would be any iasset over £6000 ( I was corrected about this on another post and told it was £3000 but it still shows as 6K on gov and eBay? )

Examples below from eBay... 

There's no new 'side hustle tax'!

We want to give you peace of mind that there’s no new ‘side hustle tax’ or a change to existing tax rules for selling online.

In general, selling personal items is not taxed if they’re below £6,000 and you’re not selling as part of a business.

So, you still won’t pay tax unless:

You are ‘trading’ or buying and selling multiple items to try and make a profit or run a business

You sell an asset for more than £6,000 (the level where capital gains tax may apply)

Grace, Manchester

Grace sells old clothes to make space in her wardrobe. Even if she sells a lot of her old or unwanted clothes she isn’t trading and sells her old clothes for less than she paid for them, so there is no tax.

Annual eBay sales: £420

Annual eBay profit: £0

Taxes owed: £0

Claire, Bristol

Claire sold her old furniture when she was moving house. Some of the furniture was valuable, but always less than £6,000 per item, so there is no tax.

Annual eBay sales: £4,000

Annual eBay profit: £0

Taxes owed: £0

Ben, London

Ben sells his collection of trading cards for a profit. Even though he receives £18,000 and makes a profit of £2,900, he has a capital gains tax-free allowance, so there is no tax.

Annual eBay sales: £18,000

Annual eBay profit: £2,900

Taxes owed: £0

Do I have to share information with HMRC?

From January 2024, new UK digital sales reporting rules require digital platforms like eBay to share information with them. However, this reporting doesn’t change your tax obligations.

On eBay, this should only affect newly registered accounts in 2024, which will extend to all accounts in 2025.

eBay will only report if you pass certain yearly sales thresholds:

• If your total sales on eBay exceed €2000, or roughly £1740, after fees.
• If you complete 30 or more sales transactions on eBay.

In general, selling personal items is not taxed if they’re below £6,000 and you’re not selling as part of a business.

See more guidance from HMRC

When you may need to pay tax for selling goods online (according to HMRC)

Generally, only business sellers trading for profit might need to pay tax.

If you’re selling unwanted personal possessions, such as used clothes, an old mobile phone or unwanted furniture, it’s very unlikely you will have to pay income tax.

If you sell possessions for more than you paid for them you may have to pay capital gains tax, but only if your item sells for more than £6,000 and you exceed your annual allowance for such gains (currently £3,000).

For more information on when you may need to pay tax for selling goods online, see guidance and examples from HMRC.

You can also use HMRC’s ‘checker’ anonymously to check whether you may need to report any income.

Learn more

Keep selling with confidence

Tax can be complicated. If you have any questions about whether you’re running a business or whether you have capital gains to pay on asset sales over £6,000, you should consult a tax advisor or look to guidance and examples from HMRC.

Learn more

[vinylscot]

You know that expression, "if you're in a hole, stop digging"?

[vintique*violet]

Coincidentally, I had a meeting with my accountant over lunch today. He has just left.

Basically, as of a few minutes ago, he says the vast amount of information in this thread is utter nonsense.

A limited company does not even need to have a bank account, although it makes things like accounting, and building a credit reputation much easier. It is theoretically possible still to run a business solely on cash, although not many would.

In my past, I worked for one of the big high street banks. Where on earth are people getting the idea that businesses can't have current accounts? In my experience (and my accountant's), almost all businesses will run current accounts. Mine certainly does.

As stated above, it is obviously more sensible to separate private and business matters where it comes to finances, but, again, it is not set in stone that you must. Proper records must be kept, and it would obviously make accounting more complicated (and expensive) if you decided to use one account, but, if that's what you want to do, just do it.

eBay, and other entities can insist on certain requirements, e.g. having a bank account, registering with them as a business, and it is their right to pick and choose who they want to deal with, based on their own requirements.

However, many posts here are confusing eBays requirements with legal requirements. They are often two very different things.

Legitimate registered LTD or LLPs are required to have a business bank account. Info easily found on banking sites..LTD companies are a separate entity so it is required.  I have tried to link but the links are being removed... so please research yourself. 

Sole traders can have business accounts or current accounts but please read the terms and conditions of your bank as many do not allow business transactions on current accounts which contain your personal transactions. 

Interesting you worked for a bank so did I in my younger years... a global bank, which was very interesting. 

eBay has their own " business" policies and terms and conditions - they are also using Gov. legislation to push many private accounts to register as business accounts without evidence... If you are NOT running a business there is no requirement to register either with eBay or HMRC. 

Edit.. spelling and tried to add the link again without success.