One of the first things to do as a new business owner is set up dedicated bank accounts. Here’s what to expect as you do.
Starting a business is undeniably exciting but setting up finances for your new venture can be daunting – especially when it comes to opening a bank account.
If you’re looking to get up to speed on business, here’s the lowdown on how to open a business bank account in Australia.
What is a business bank account?
Unsurprisingly, it’s all in the name: a business bank account is a bank account you use for business purposes. It works like a personal account in many ways, but business bank accounts provide handy features designed to simplify your business finances.
What do you need to open a business bank account in Australia?
Before opening a business bank account, you must prepare a few key documents and details for your application.
Photo ID
Each director and anyone operating the bank account must provide valid government-issued ID, such as a passport or driver’s licence.
Proof of your address
A personal bank statement or utility bill are ideal.
The name of your company
This should be exactly as you registered it through Australia Securities and Investments Commission (ASIC).
Your business address
This must be the address where your business is registered.
Your ABN, ACN and TFN
Have your Australian Business Number (ABN), Australian Company Number (ACN), and your business’s tax file number (TFN) handy.
Business-specific details
This includes the industry your business occupies and supporting documentation related to trust or partnership business structures.
How to open a business bank account
Opening a business account isn’t unlike opening a personal account.
Depending on the kind of account you’re interested in, you’ll typically:
1. Compare your options
Shopping around is vital if you’re opening a business bank account. To ensure the needs of your business are accommodated from the get-go, consider things like:
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Unique bank-related features
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Fees for relevant business accounts
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Banking mobile app
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Online bank account
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Overdraft facilities
2. Create and submit your application
After finding a winner, apply on the bank’s website with the details and documents mentioned above. Depending on the account, you may have to apply or follow up with supplementary documents in-branch.
3. Use your account
If you’re approved, you’ll be able to use your new business bank account as soon as it’s opened. Any credit or debit cards included with your business bank account will be posted shortly afterwards.
Can I use my personal bank account for business?
Having your finances in one place may seem simple on paper, but there are three reasons why opening a business bank account is a much better idea.
Accurate accounting
Separating personal transactions from business transactions can speed up financial admin year-round for both you and your accountant. And in the event of an audit, you’ll have right numbers for the ATO on hand.
Better business reporting
Business expenses mingling with persona grocery purchases can make it difficult to easily track things like cashflow, leading to potentially disastrous financial problems going unchecked.
Simplified tax prep
Using one business account for expenses and another for managing GST and income tax liabilities can be a huge timesaver when tax time comes around.
What’s the best type of bank account for a small business?
With no one-size-fits-all approach to business banking, treat any time spent researching as an investment.
Depending on the needs of your business, you might consider a:
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Business savings account
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Small business transaction account
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Business term deposit
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Foreign currency account
You may even need more than one account to cover all your financial bases.
Just keep in mind that similar-looking business bank accounts can differ in big ways between banks, so make sure to always read the small print.
Can I open a business bank account online?
Applying for a business bank account online is often as simple as opening a personal account. Just fill in the online application and you’re good to go.
Not all business bank accounts can be opened online, though. Some banks allow you to start your application for certain accounts online but require you to drop into the branch for an ID check to complete your application.
How easy is it to change banks?
If you eventually find a business bank account from another bank that better suits your needs, changing banks often involves three steps.
1. Update your payment details
Inform your service providers and customers about your new account details to ensure your cashflow isn’t impacted by the change.
2. Transfer automated payments
Carefully go through your statements to ensure regular payments like staff wages and direct debits are migrated over to your new account.
3. Close your old business banking account/s
Once you’ve finished setting up your finances, contact your previous bank and close your old business account.
Charges and fees of business bank accounts
Business bank accounts can have a variety of fees and charges. Depending on the account, these can include:
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Internet banking fees
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Monthly fees
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Currency exchange fees
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Self-service (electronic) withdrawals and deposits
Cheques you write, collect, or deposit
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Transaction fees (often called branch assisted withdrawal or staff assisted withdrawals)
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ATM cash deposit fees
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Establishment fee (when transferring accounts at the same bank)
Being savvy can help you save money. When hunting for an attractive business banking account, remember to:
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Preference internet banking to avoid assisted withdrawals
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Keep an eye out for accounts with no monthly fees
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Avoid opening account(s) with features you won’t use
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Avoid overdrafts where possible
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Read the fine print on any business-related credit cards
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Look into introductory rates and offers for new business bank accounts
Look professional and stay compliant with MYOB Business. With the most accurate bank feeds via more institutions, MYOB Business helps you get an up-to-date and accurate view of your business’s cashflow. Discover more today.
If you need help setting up your business bank account or with your small business’ finances, call us on 0478 101 111.
Source: MYOB June 2022
Reproduced with the permission of MYOB. This article by Patrick O’Loughlin was originally published at https://www.myob.com/au/blog/open-business-bank-account-australia/
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