How To Open A Business Bank Account In Australia

In Australia, you’ll need a business bank account if you’re operating as a partnership, company or a trust, as your business finances will be considered separately to your personal finances for tax purposes. You can find out what type of business you have on the gov.au website if you are unsure.

You may also choose to open a business bank account if you’re a sole trader, but this isn’t mandatory. A business account won’t be necessary if you prefer to deal with your personal and business finances all from your personal account.

The types of institutions that offer business bank accounts have grown over the years, to include not only traditional highstreet banks, such as CommBank, NAB, ANZ and Westpac, but what are known as challenger providers such as OFX and Wise. These relatively new industry players sometimes offer lower transaction costs, faster international payments, and as they are often web-based, provide fully digital ways to manage your account.

Business bank accounts allow you to manage day-to-day finances as you would with your personal account. They may also come with time-minimising features, to make administrative tasks less arduous. This includes the ability to make batch payments and manage the account through cloud-based accounting software.

You can also opt for an account that allows you to carry out foreign transactions, save and invest money or take out credit. Some providers also offer business-specific services such as advice for investing or for small businesses generally from their in-house advisors.

Whether you’re legally obliged to open a business account, or choose to do so, it’s worth comparing different providers and their products to find one that’s right for you.

Accounts can differ on fees charged and services on offer, and features can also vary greatly. Before deciding on a particular account, you may want to consider:

• Opening and maintenance fees
• Transaction charges
• Customer service
• The number of users you can add to the account
• Availability of a bank card for yourself and members of your staff
• Whether you can hold multiple currencies in the account
• Ease of international payment processes and the associated fees and exchange rates.

How much you pay for a business account varies depending on the provider.

Traditional banks often allow you to open an account for free, but sometimes require you pay for each in-person transaction you make. Alternatively, they can charge a monthly fee of around $10 for a set number of free transactions a month—usually up to 20 or 30—if you wish.

Challenger providers may charge a one-off fee to open your account. This includes Wise, which requires you to pay $22 to open an account, but charges no monthly fees. However, these types of providers often charge less in transaction fees.

To set up a business account in Australia, you’ll likely need to book an in-branch appointment if you choose a highstreet bank as your provider. Modern providers often offer a fully online process, requiring you submit digital copies of required documents.

The provider may confirm your account as open instantly, or take up to a couple of days to get back to you, if it needs information about you or your business verified.

The information and documents you will need to have ready for the provider include:

• Business name
• Australian Business Number (ABN)
• Primary business address
• Industry type
• Identification for all owners or partners.

An identification document will likely need to be either a:

• Passport
• Australian or New Zealand driver’s licence

Alternatively a provider may accept two non-photographic forms of identification such as one of the following:

• Australian or foreign birth certificate
• Australian or foreign citizenship certificate
• Centrelink pension or health card

Otherwise, a provider may accept one of the non-photographic documents listed above and one of these documents:

• Commonwealth, State or Territory-issued notice that shows your full name and address
• Australian Tax Office notice that shows your full name and residential address
• Utilities notice from a utilities provider or a local government body that shows your full name and address
• Overseas drivers licence

It’s best to check the provider’s website, or contact it, to find out exactly what it requires from you, and anybody else, depending on your business entity type.

An overdraft facility is a popular form of financial product for businesses that allows one immediate access to funds greater than the income available in its account.

Banks and other account providers can offer unsecured and secured overdrafts, depending on how much you want to borrow, and will charge interest on the amount overdrawn.

For instance, CommBank and Westpac offer unsecured overdrafts of up to $250,000 and secured overdrafts for funds over this amount. The latter requires you provide a level of security for the overdraft through an asset such as residential or commercial property.

Overdrafts can allow businesses to borrow between $2,000 and $1 million in funds, with interest rates between 7.5%-25% per annum. Business owners must apply for overdrafts and providers will access their applications based on business turnover.

There are a number of reasons why a business owner may want to switch accounts, including lower transaction fees or suspected better customer service from another provider.

To switch you’ll need to open a new account, withdraw the money left in the account you want to close, and transfer any recurring payments. Don’t forget to inform your clients of your change of account details. Once you’ve taken these steps you can close your old account.