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How to find the best business bank account
To find the best business bank accounts in Australia, you should compare a range of factors that are important to your business. Here are some steps to consider:
- Compare account features: Look at the features offered by different banks, such as transaction limits, online banking capabilities, and integration with business accounting software.
- Review the fees: Check the fees, including monthly account fees, transaction charges and withdrawal fees. Some accounts may offer fee-free options under certain conditions, like if you maintain a minimum balance.
- Is the account provided by an authorised deposit-taking institution? An authorised deposit-taking institution (ADI) is a financial institution, like a bank, credit union, or building society, approved and regulated by the Australian Prudential Regulation Authority (APRA) to accept customer deposits. This also means funds on deposit are protected up to $250,000 per account holder, per institution.
- Check online reviews and ask other business owners for recommendations: Good customer support can help resolve banking issues quickly. Look for a bank with positive online reviews and a strong presence on social media for handling enquiries. You can also ask other business owners about their bank and customer service experiences.
- Check for account access options: Ensure the bank provides easy access to your account through online banking, a mobile app, and/or branches. Some business owners may value nationwide branch access, while others may only need online services. For businesses making regular cash deposits, be aware of monthly fees and limits on in-branch transactions.
- Consider the interest rates: Some business transaction accounts pay interest on certain balances, while others don’t. If you’re not looking to open a separate business savings account, then this may be of importance.
- Look for special offers: Many banks offer promotions and perks for new business accounts, such as waived monthly fees for the first year or a subscription to accounting software for a period of time. These deals can help you offset costs and add value beyond the account’s standard offering.
Types of business bank accounts
Here are the most common types of accounts you'll come across in business banking:
Business transaction account
Designed for everyday spending and payments, allowing you to manage your business cash flow efficiently. These accounts offer easy access to funds for payments, deposits, and transfers, often through a debit card, online banking, or cheques. They typically do not earn interest, but they provide the flexibility and convenience needed for daily operations. Many transaction accounts also offer handy features like automatic bill payments and integration with accounting software.
Business savings account
Lets you grow your business’s spare cash while keeping it easily accessible. These accounts offer interest on deposited funds, allowing your business to earn a return on its savings without long-term commitments. While most high-interest savings accounts provide the flexibility to withdraw funds at any time, there’s sometimes minimum and maximum balance requirements for the most competitive interest rates. This kind of account might be suitable if you want to set aside funds for future expenses or growth, while maintaining liquidity.
Business term deposit account
Business term deposits are a low-risk savings option where your business can lock away funds for a fixed term, usually ranging from one month to five years. In return for keeping money in the account for the agreed period, your business earns a guaranteed return, with interest with rates varying based on the term duration and which provider you choose. Term deposits may be an option if your business has surplus funds you do not need immediate access to, providing a predictable return. Just remember that if you withdraw the money before the term ends, the term deposit rate your business earns will be lowered.
Specialised business account
These are business accounts that are tailored to meet specific needs, such as foreign currency (FX) accounts for businesses engaging in international trade or industry-specific accounts designed for certain sectors, like accounting or manufacturing. Foreign currency accounts allow businesses to hold and transact in different currencies, minimising the cost and complexity of international transactions. Meanwhile, industry-specific accounts often come with features and benefits that align with your financial needs, like a statutory trust account for real estate agents or solicitors.
Business bank account features to look out for
When choosing a business bank account, consider these key features:
- Easy access to funds: Ideally your business account will provide quick and easy access to funds for day-to-day operations, like paying suppliers, employees, and other transactions. A good-value business bank might also offer unlimited ATM withdrawals or electronic transfers without any fees.
- Multiple user access: Some business accounts let you add multiple users, like partners or employees, with different permission levels, making it easier for you to manage finances across teams and departments.
- Integration with accounting software: Most business transaction accounts integrate with popular accounting software like MYOB, Xero and QuickBooks, helping you manage your bookkeeping more easily.
- Cheque and debit card facilities: Think about whether your business needs cheque books and debit cards, or corporate credit cards for making payments, both in-person and online.
- Online and mobile banking: Most accounts come with online and mobile banking access, allowing you to manage business finances, track transactions, and make payments from anywhere.
- Automatic bill payments: These accounts often allow automatic bill payments for recurring expenses like utilities (e.g. energy bills or subscriptions (e.g. office replenishments), helping you keep your business organised and avoid late fees.
- Overdraft facility: Many business transaction accounts offer an overdraft option (subject to credit approval), giving you access to extra funds when cash flow is tight, though this typically comes with interest and fees.
- Account support: What level of support does the bank offer? This ensures you have the help you need to resolve any issues quickly and keep your operations running smoothly.
Making the most of your business bank account
Some of the main advantages of a business bank account include:
Separation of personal and business finances
You can use your business account solely for expenses like supplier payments or employee wages, while keeping personal expenses separate. Major bank NAB suggests that even if you’re a small business, sole trader or running a business part time, opening a separate account can be beneficial.
Professionalism and credibility
A dedicated business account gives your business a sense of professionalism and may help build trust with customers, suppliers and partners. It also demonstrates your business’s legitimacy, as you'll typically need to provide details like your ABN or ASIC registration to open the account.
Access to business-related features
Business bank accounts often offer features that cater specifically to business needs, such as invoicing tools, merchant services or overdraft protection. One useful feature some accounts offer is an "integrated gateway", which lets you set up a payment processor on your website to accept credit card transactions directly from customers.
Easier tax preparation
Having a business transaction account may make it simpler to track and report expenses for tax purposes because it keeps your business and personal finances separate. You can easily pull statements that show all business-related transactions, making it quicker to prepare for tax lodgments, including your Business Activity Statements (BAS).
Better cash flow management
Helps you manage cash flow by keeping track of incoming and outgoing payments more effectively. With features like automatic bill payments and electronic transfers, you can ensure regular bills are paid on time, preventing late fees and disruptions to services.
Access to business loans and credit
A business bank account is usually required when applying for business loans or a line of credit. If or when the time comes, you may qualify for these services if you already have a well-established account with a lender and can demonstrate a solid cash flow history.
Security
Some accounts provide enhanced security features to protect your business funds and reduce fraud risks. Many business accounts have fraud protection, multi-factor authentication for online banking, and daily transaction limits to safeguard your cash.
Once you open a business transaction account, you’ll often have the option to link a business savings account, as long as the bank offers it. This can help if you want to keep your working capital separate from your savings, making it simpler to manage your business finances.
Are there any disadvantages of business bank accounts?
Having a business bank account is a necessity for most businesses. Just make sure you're aware of the potential costs and limitations, including:
Potentially higher fees
Depending on the business transaction account you choose, it may come with higher fees compared to personal bank accounts. This includes monthly fees, transaction fees and additional costs for services like payroll processing or invoicing.
Minimum balance requirements
Some accounts have a minimum balance requirement, which may force you to keep a certain amount of money in the account to avoid fees. Failing to meet this requirement could result in monthly charges or restrictions on the account.
Limited in-branch withdrawals
Most banks have a capped number of in-branch withdrawals you can make each month. For example, St. George’s Freedom Business Account allows 30 in-branch withdrawals per month, while its Business Cheque Account Plus offers 70 withdrawals each month.
Free accounts usually mean limited features
"Free" typically means no monthly fees, but there may still be other charges or limited features. Services like bank transfers or overdraft protection could have extra costs. Additionally, a minimum monthly balance (e.g. $100,000) may be required to qualify for the $0 monthly fee.
Longer setup time for new businesses
To set up your business bank account, you'll need to provide documents such as proof of business registration, identification, and financial details (e.g. ABN/ACN if applicable). The time it takes to process your application will depend on the type of business you have, whether it's a sole trader, partnership, company, trust, association, or co-operative.
In-branch transactions will likely come at a cost
Some business accounts charge a monthly fee if you plan on doing most of your banking in-branch rather than online. For example, CBA’s Business Transaction Account charges a $10 monthly account fee for in-branch transactions, while there are no monthly account fees for businesses banking online.
Costly overdrawn charges may apply
Some banks charge interest or an overdrawn account fee if the account becomes overdrawn without prior arrangement. These costs can become significant if the account remains overdrawn for an extended period and are generally higher than standard charges applied to an arranged overdraft.
Key differences between business and personal accounts
Business bank account
- Allows businesses to make payments, transfer money electronically and use a business debit card for everyday transactions
- Helps separate savings from working capital, making it easier to manage business finance
- Some business accounts may require a minimum deposit, maintain a minimum balance, and/or charge monthly fees
Personal bank account
- Allows individuals to make payments, transfer money and use a personal debit card for everyday expenses
- Used to pay personal expenses, such as phone bills, mortgage or personal loan repayments
- Some personal bank accounts may have monthly balance requirements and terms that limit their use for business transactions
Which bank is best for business banking?
The best bank for a business account will depend on several factors, including the size of your business, the services you need, and your budget. Larger businesses may prefer banks with extensive features and support services, such as advanced invoicing or payroll tools, while smaller businesses or sole traders might focus on low fees and easy access to online banking.
You might also want to consider factors like customer support, access to branches or ATMs, and any specific industry needs, like merchant services or international payments.
Documents you’ll need when applying for a business bank account
To apply for a business bank account, you’ll need to be 18 years of age and operating in Australia with an Australian address. Here’s what you’ll generally need:
- Identification, such as a driver’s licence or passport, or a birth/citizenship certificate plus a Medicare card or recent utility bill of all business directors and significant beneficial owners
- ABN or ACN if your business is a company
- Business registration details
- Full names, address, date of birth and contact details of all business directors and significant beneficial owners
- Some banks may ask for additional financial information, such as partnership agreements, ATO notices, ASIC certificate of registration, trust deed or business minutes
Most applications can be completed online in as little as 15 minutes, particularly if you already have a personal account with the same bank. However, if your business has a complex structure, such as a trust with multiple significant beneficiaries, you may need to submit your application in person at a branch.
