Cheques act indemnity

[covenant]

Hi everyone,
I have proposed to register my company as ctouch and have different divisions under it, starting with the virtual clothing accessories for men. This is because in future I intend to go into other businesses.
Unfortunately my business advisor thinks this will cause me unnecessary problems when it gets to being paid, stating I would require a cheques act indemnity for the bank, which he said would be unlikely with a startup.
Could someone explain this to me please.
Cheers.

[bedazzle]

I'll give this a go.

Are you planning to have just one bank account whereby all the divisions will pay their money into?

Do you plan to call each division by a different name?

If you are getting customers to pay cheques out to the name of the divisions and those divisions don't have their own individual bank account, and you want to pay these cheques into your bank then you will need to pay a sizeable indemnity or take out insurance to cover cheques that might not be honoured.

E.G. you will be able to pay cheques made out to ACME Inc into a bank account in the name Road Runner Ltd.

Hope this helps, this is based on you having a name for each division.

Darren

[covenant]

Hi Bedazzle,
I intend to give the different divisions different names and if possible open different accounts for each division.
Are you saying it is possible to register as road runner ltd and have for example two divisions under it with each having a seperate business account and that this would exempt me from the indemnity cheques act.
Thanks.

[bedazzle]

this is a tricky one, are the divisions going to be ltd companies?
If not I'm not sure you would be able to get seperate accounts for these if they are trading as a division of the main company