Updating post from Reddit.
As the title says, I’ve recently started a buy to let and I am using a business bank account to separate the money from my own personal money.
What is the best option for making the money earn some interest, put it in a savings account with the same bank, or is there anything else that people do? Might be missing the obvious and this may sound dumb but I’m just a beginner with business accounts so sorry in advance!
I do but its linked to by BTL SPV LTD. I have a starling account for collecting rent and day to day expenses and a Virgin Money Business account to hold more than 1 month's estimated expenses. I've had the account for about 5 years, for a lot of that time interest rate were so low it mattered little but the rates have gone up to 3.15% which is fine for me.
I dump all cash into a Director's pension at the end of my tax year to keep my Corp Tax as close to 0% as possible so I don't use it for long term storage.
I haven't really looked around for business savings account, I remember it being a bit of a pain when I was starting out so stuck with what I know, it will be interesting to see other choices.
Direct debits mortgage etc linked to Virgin I take it and you have a standing order set up monthly from starling to Virgin I assume? Why two?
Starling is day to day. It collects rent and covers the regular direct debits and maintenance costs, it offers no interest. The virgin Business account only offers interest. so two accounts.
I have considered trying to get a business credit card but I don't think is worth it for me.
I think the way I may look to operate is to just set it up in a way for the rent and all the expenses to be taken from virgin, and then whatever is left can stay throughout the year for expenses that are unexpected and tax. Anything that remains can either stay or move to a second business account to start the year afresh, might make things easier that way to manage
Is your btl in a ltd company? If not you are probably paying for a business account that you don't need as dont they charge?
Starling still doesn't charge for business accounts. Had mine for about 5 years now.
I’m with Virgin and they don’t charge. It’s in my name, yes. Just means I have the peace of knowing my bank won’t close my account. So anyways what’s the best way to make the money work for me?
you are a bit limited, no pun intended, with a SPV limited company, you can't trade or invest easily so my strategy is to I build up cash and pump it out and make it grow outside the LTD.
I keep the company very lean which means I start my tax year at £0 but I try to cover any large known expenses before the end of the tax year and have built up a cash reserve for unexpected small maintenence within 2 months.
Others may comment on more complex arrangements but its not for me.