small-business

Your guide to comparing small business bank accounts

Information verified correct on December 10th, 2016

Giving the best chance of success for your business means you will need the right finance plan.

Setting up or maintaining a business is no easy task. There are many steps to be followed such as planning your finance, determining your business structure as well as financing your business in a way that suits its cash flow. A business bank account can help you keep track of your expenses and provide flexible banking for your staff.

A business savings account has many of the same features as your personal high interest savings account, but the way you choose and use a business savings account is what sets it apart. The responsibility and accountability also shift with a business savings account because rather than simply saving for a holiday or maintaining an emergency fund for your family, you now have to look after the interests of your business venture, your investors, your clients and your staff so it is not only important how much you earn, but how you look after those funds too.

This article is about the business savings accounts and who you can get the best account* that suits your needs. Furthermore, this article will explain what the business savings accounts are and what they offer.

Rates last updated December 10th, 2016
$
$
months
Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned
RaboDirect Business High Interest Savings Account
Introductory rate of 2.25% p.a for 4 months, reverting to a rate of 1.80% p.a. Available on balances below $250,000
2.25% 1.80% 0.45% $0 $0 / $0 Open More
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What is a business bank account?

This is an account held at a bank or financial institution for the convenience of the business. Usually these accounts are opened to securely and quickly provide frequent access to funds on demand. Depending on whether it's a transaction or savings account, it normally does not bear interest unless its a high interest savings account. But instead the customer can deposit or withdraw any amount of money subject to the availability of funds.

What are the types of business bank accounts?

  • Business transaction account

    This is pretty much allows businesses to deposit and withdraw cash through ATM cards, electronic debit cards and cheques. Some of these accounts may require a minimum deposit and some will require proof of business and identification. Banks have many different types of transactional account, so some may only allow a certain amount of transactions whereas some could have unlimited.

  • Business savings account

    A savings account is an option for a business if they want to accrue interest. It provides the business with some kind of return by saving and managing the business' liquid assets. Savings accounts are not linked with cheque books and debit cards so it's more difficult to access the funds. Some business savings accounts will require a minimum deposit.

  • Business term deposit

    A term deposit is a fixed amount of money deposited at a financial institution for a fixed amount of time for a fixed amount of interest. Businesses can utilise term deposits by depositing a portion of their assets for a period of time for a guaranteed return.

How do I open a business bank account?

The way in which you open a business savings account will depend on the type of business you have and how you will be using the account. For example, most high interest savings accounts allow you to apply online. This online application takes less than ten minutes, in which you enter your personal details, business details and include details of a linked transaction account you will be transferring funds to and from.
In most cases, even with an online application you will need to visit a branch to verify your details. This is where you will need to provide original copies of your driver's license and other business documentation such as your Australian Business Number (ABN) and business name registration.

You may also need to apply directly at a branch if more than one person in the business needs access to the account. Also remember that if you are opening a business savings account with another person as a partnership, you need a partnership ABN and can't use two sole trader ABNs.

Dealing with business finances is very different to managing your personal savings accounts as you are now accountable for a lot more money, to a lot more people. Not only will the investment choices and savings plans of a business affect the person signing the cheques, but there are other staff members, managers, customers and maybe even shareholders who are affected too.

To open a business savings account:

  • Determine why your business needs a savings account and what are its savings goals.
  • Does the business need another income stream, or more financial stability?
  • How will the business savings account be accessed and by whom?

Do business banking accounts with $0 monthly fees exist?

Yes, there are several trusted banks and financial institutions across Australia that offer these cards. For example, Suncorp Bank’s Business Everyday Account charges no monthly fee when you maintain an average balance of $2,000.

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How does a business account work?

Business bank accounts are designed as a place to keep the business funds safe while transactions are being conducted. First the business will need compare bank accounts and enquire if the bank account can be opened for the purpose of a business because banks usually have a separate range of products designed for businesses. To apply for an account in Australia, the banks will need information such as the ABN or the Australian Company Number (ACN) and your business will need to be currently registered in Australia through the Australian Security Investments Commission (ASIC).

Most transactional business accounts come with a form of debit card so you or your employees can withdraw money from the account through an ATM, as well as online, phone and in branch banking services for business expenses. It may be a good idea to only allow business expenses on that account so when the end of the financial year arrives it is easier to account for tax deductions.

Whether you are investing or you are opening a new account it will always be beneficial to find the best deal*. This may be in the form of a loan account with low interest rates and fees or a savings account with a high interest rate and low fees. Here are some things to consider about business bank accounts;

  • Fees. Consider things such as monthly service fees and how much the bank will charge once you've made more than the allowable transaction numbers. Have a look at the spending habits of your business and if you've noticed a lot of transactions, then you may want an account that doesn't charge this type of fee.
  • Interest. Usually interest rates for bank accounts depend on the amount that you have in the account. However, its important to keep in mind that you choose an account that has a competitive interest rate.
  • Features. If you business is dominantly online then it could make sense to apply for a bank account that sends e-statements. You may also need an account that allows a Line of Credit to maintain the cash flow for your business.
  • Accessibility. It is standard for a business account to have business online banking, telephone banking and also has a debit card available. You can also expect direct debit, periodical payments as well as BPay and a chequebook.
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How do I compare business bank accounts?

There are features which are common to all business savings accounts, but there are also some very competitive interest rates, offers and inclusions which you should compare before you choose a high interest savings account. It's important to look at the cash flow of your business and how regularly transactions are made.

  • Know why you need a business savings account. Your business may need a savings account to act as an emergency fund, as a way to supplement other investments or to provide financial stability in the business with a central savings account. The reason for your business savings account will help you determine the features you need when you compare your options, for example, if your business savings account is primarily an investment then you need a high interest rate, but if you want to use your business savings for cash flow in emergencies to avoid credit card use, then you need an account with easy access.
  • Know who will access the account and how. The highest interest business savings accounts are accessed solely online, however, if you need to give the president of the board access to the account, the fact that he is at retirement age can impede his ability and willingness to access the account online and you'll need branch access as well.
  • Keep the size of your business in mind. Some business savings accounts require a minimum balance to open the account, or may be able to be used fee free if a certain balance is maintained. Other accounts will offer high interest-only if the account balance is above a certain minimum amount, so choose the account with minimum balance requirements which suit your turnover.
  • Compare the providers' focus. Some Australian banks will have a big business focus, while others will be dedicated to small business owners and entrepreneurs and to choose the best business savings account* you need to compare the focus of the bank and the intended business of each account. For example, if you are a small business, then a savings account which requires a minimum balance and no monthly withdrawals to earn interest is not comparable to a business savings account which rewards you when you make regular deposits.
  • Know the type of business you really are. Even a small sole trader business can turn over a million dollars in a year, so what you actually need to look at are the value of your savings, rather than how many staff you have, what your clients are worth or how much you owe on your overdraft. Consider the type of business you are and how it is run, do you invest most of the profits back into the business by investing in assets and people, or do you have big business big balances which need a safe resting place?
  • Start with your current bank. Not all high interest savings account offers are advertised and if you set up a meeting with your existing business bank to find out what sort of deal they can strike for you on your business savings account and interest rate, you may be profitably surprised. Make sure not to discount an offer on a business savings account just because they can't offer a comparative interest rate, as they may be willing to do you a better deal overall on your other accounts and financial products if you bring them your savings as well.
  • Know how you will use the account. This will help you determine the features you will need on a business savings account. For example, will you make one lump sum deposit a year after a peak period, or will you make regular contributions and do you need to make withdrawals or does your business have a long term savings plan?
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What are the features of a high interest savings account for your business?

If you are considering whether you business could use a savings account rewards you for saving, there are some features you may want to consider;

  • A high compounding interest rate. The interest rates offered on high interest business savings accounts are often two to three percent above the official interest rate, which means that you can have a high interest rate calculated on your savings every day. That also means that this interest compounds because when interest is calculated daily, you earn interest on your balance and interest on the interest already calculated from the previous days, before the balance of interest is paid to your account at the end of the month.
  • Financial stability. Being able to transfer your business funds to a high interest savings account gives you stability in having a secure and ever increasing savings account balance. With a growing savings account balance you can show investors or lenders how financially stable your business is and this can make it easier to obtain business loans, overdrafts or a business credit card.
  • Safety for your funds. A high interest savings account allows you to keep your business funds safe and growing until you need them. For example, if your business is a not for profit organisation or a charity, then you want to make sure the funds you have and raise and there in strength when you plan your next event and you can be sure you will have a healthy balance, plus interest and not worrying about any fees.
  • Plan for the future. When you make a deposit of your profits into your business savings account you hope it will be just one of many because as your savings work hard for you by earning interest, you can continue to work hard so you can make more deposits. As a result, you can watch your savings grow and take the opportunity to review your business goals, plan for the future and decide on the way to spend the funds, from a position of financial strength.
  • Online banking. A business savings account is able to offer such competitive interest rates and low fees because it is based primarily online. This means the bank doesn't need to pay for staff to help you manage your account because you can do it yourself. Just make sure that if more than one person has access to the online banking details that they can be trusted to act in the best interests of the business, or look for an account which requires authorisation for payments by email or SMS.
  • Branch access. While an online account can help you avoid many account-keeping fees, some businesses may require the ability to go into a branch when there are numerous signatories or board members to access the account.
  • Regular business statements. Your high interest savings account should provide you with regular statements so that those with an interest in the business – board members, shareholders or directors – can see at a glance that the business savings plan is on track. Regularly reviewing your business savings account statements also allows you to review where you have met or exceeded your savings targets and where you have fallen short and why.
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What are the pros and cons of a business bank account?

Pros

  • Having a central place for funds. When you run a business there are so many facets you need to be in control of that you want to make your business finances as simple as possible. This simplicity can be achieved when you have just one savings account to manage with your business funds. This means just one branch, one set of online log in details and one statement to review and file each month. These bank accounts come with good accessibility features, which can help the business function more efficiently.
  • A separation from your personal funds. No matter how big or small your business is, there often comes a time when the line between business and personal funds becomes blurred – there is a bill to be paid, a contractor who wants their money and you're tempted to use your personal funds to tide you over. However, without a separate place for your business funds you are jeopardising the financial stability of the company because transfers to and from your personal account don't look good to your accountant and mean you can't manage your business with the funds available from the income. Therefore, when you make a clear distinction between your personal and business funds you maintain a strong financial outlook.
  • Professionalism for customers. A business bank account can help establish the business' credibility with customers and creditors. When you are able to provide business bank account details to your customers for payment, you portray a professional image, rather than appearing to be unprofessional without separate business accounts.
  • Easy accountability. The owner of the business controls the expenditure of the account. This can be limited to authorised employees to make deposits, or only issuing debit cards to particular employees. With your business and personal funds separate and your business savings all in one place, it makes for easy accountability at tax time when you need to report the income from your savings interest earnings. You can also easily report to your board or shareholders with all of the business savings in one place.

Cons

  • Business bank accounts usually have a lot of fees. For a business that is well established, a minimum amount will most likely apply as well as fees if the maximum amount of transaction has been breached.
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How do I determine my business savings needs?

  • Is your business starting and and therefore needs security and a stable financial backing? If you need a business savings account for a new business then you want to be able to transfer your hard earned and first-earned payments into the account so they can keep earning and help your business grow stronger. Having a stable and regularly increasing savings account is also good for a business as it shows you are financially stable, which not only looks good to banks if you need to apply for a business loan, but is also something which will come across to your customers too.
  • Is your business a charity or not-for-profit organisation and needs a safe place for funds? If you are looking for a business account for a charity or a not-for-profit organisation, then you may be able to negotiate a lower fee structure, or even choose a fee free business savings account. This is important as savings account fees can easily eat away at your hard earned funds over time and if you need those funds to plan events and fundraisers, your plans would have to be significantly toned down if there was less in the business savings account than originally planned for.
  • Does your business need a profitable place for its profits? A business savings account can help your profits continue to grow during the year while your business continues earning and operating. In this way a business savings account can have the same benefits as a personal account, as a designated savings account allows the business to review their goals and plans for the future and decide the best way to spend their profits, or whether to reinvest.
  • The size of the business will determine the size of its savings and help you choose a business savings account. Business savings accounts may require a minimum balance to earn a higher interest rate, or may be able to be operated fee free if a minimum balance is maintained.
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How do I use a business savings account?

  • Your high interest savings account is there to grow and strengthen your business and this is another reason many accounts are primarily held online. When your business savings account is an online account you don't receive an ATM, EFTPOS or credit card to access your funds. Instead, you nominate a linked account, from which you transfer funds into your business savings account and to which you transfer funds to withdraw from the account.
  • Setting up a linked transaction account is usually part of the application and depending on the provider, the linked account may or may not need to be from the same provider. If the linked account is with the same provider, then transfers to and from your business savings account will be instant, however, transferring between different providers can take around three days. This waiting time can also determine whether your business needs more distance or faster access to the funds.
  • If you are using your business savings account as a high interest investment, this is a good way to diversify your business investments. A cash investment is safe, secure and easy to manage, access and use, however, there are also much higher yield options available such as term deposits or shares. Therefore, while cash investments can be an important aspect of your business investments, don't put all of your funds in one basket.
  • You can also use your business savings account as an emergency fund for your business, so you can avoid resorting to high interest credit cards or overdrafts when cash flow is slow. Just as you do in your personal emergency fund, aim to save up six months worth of expenses. This means your business will be able to pay its bills, pay its staff and keep running for six months if all of your clients suddenly disappear.
  • The structure of your business will determine how your business savings account is used because you will need to know how the savings will be accessed, where you will want to access them and who will be accessing the account, to determine the best business account* option.
  • As unlikely as this is, there are times you will find you have to dip into your emergency business savings account when a client is late paying an invoice, or you receive an unexpectedly large phone bill. Just make sure when you use funds from your emergency fund, you top it up again as soon as possible.
  • If you manage a small business it's great to have a bank that encourages your business to grow and helps you manage your time and money to best effect. In this article we'll be considering what to look for in high interest savings account for small business.
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Business bank accounts for Small businessesBusiness bank accounts for small businesses

Small businesses come in many varieties and each one has a unique set of circumstances that govern the way the business is managed. A café might have a regular level of income throughout the year, employ a dozen casual staff and deal with only four or five suppliers; a florist might be a family business that employs no staff, buys all its stock at the wholesale flower market and has high peaks of income on Mothers Day and Valentines Day and quieter trade the rest of the year; a business consultant might receive a cheque every few months when a project finishes then have no more income until the next project ends and only needs to buy stationery and computer supplies from the local newsagent.

This is just a handful of examples of small businesses with very different patterns of income and outgoings and very different banking requirements. Of the many banking options available, three of the most common types of business banking accounts suitable for small business operations are transaction accounts, savings accounts and term deposit accounts.

  • Business transaction accounts are designed for day-to-day financial transactions. They offer a wider range of transactions than savings and term deposit accounts which are intended to have few transactions. Unlike term deposit accounts and savings accounts, transaction accounts don't pay interest on any surplus funds in your account. A business transaction account might not be the best account* for the business consultant described above who has a minimal number of transactions.
  • Business savings accounts are designed to manage cash that is not likely to be required for routine transactions. You can access the funds in this account more easily than funds in a term deposit account and you earn interest on account balance. If your business income is uneven you might want to use a high interest savings account to hold funds that you will need to access in the near future but not immediately - for example the florists described above might want to hold enough funds in a savings account to tide them over the periods when business is slow.
  • Business term deposit accounts are designed for investing surplus funds that aren't required for the business for a set period. Funds in a business term deposit account can't be accessed until the set period expires and interest is earned at a higher rate than funds in a business savings account. A small business might use a term deposit account as a place to keep funds that will be needed to pay the GST bill at the end of the financial year, or to hold savings intended to pay for future business development projects.
Tax essentials you should know about your business savings account

To fully understand how important the right business savings account is, you need to know what kind of documents and tax processes you will need to follow. A business bank account will allow you to record your savings and expenses, to make it easier to meet tax regulations in Australia.

What you need to register your business for tax purposes

  • A tax file number (TFN). Sole traders are able to use their personal TFN but partnerships, companies and trusts require a separate one.
  • An Australian Business Number (ABN). Required if you require payments from other companies and also makes it easier to register for GST and PAYG. If you don't provide one the Australian Tax Office (ATO) will withhold maximal tax.
  • Goods and Services Tax (GST) registration. If your project turnover is over $75,000 a year, then you register for GST.
  • Pay as you go (PAYG) withholding. Required if you pay your employees salary or wages, as well as if you make payments to contractors or directors.
  • Fringe benefits tax registration. If you provide fringe benefits to employees, this is required.
  • Fuel tax credit registration. If you fuel in your business, you are also required to register.

What kind of records should I keep?

  • Records of income, sales, expenses, purchases
  • Bank records
  • Asset purchase records
  • Contracts and agreements
  • Annual financial reports
  • Logbook of deductible expenses
  • Vehicle and fuel records
  • Stocktake records
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Things to avoid with business bank accounts

  • Fees. This is one of the most common problems with business accounts. Aim to minimise and avoid fees on transactions. Make sure you read the terms and conditions, Product Disclosure Statement and conditions of use concerning your account.
  • Not getting legal advice with joint accounts. If the business account owner is to be more than one individual, then legal advice beforehand is high recommended.

Frequently asked questions

You can use our comparison table to compare our features business savings accounts. When you've decided on the account that best suits you, you can click open to be safely redirected to the provider's enquiry page.

This page displays our featured term deposits. When you've chosen a term deposit that best suits your business, you need to ensure that the term deposit can be opened for the purpose of a business.

The main way people will find the best business savings accounts* will be by using the investment calculators. These calculators will allow you to compare the business savings accounts that are available in the database. The output of the calculator will allow you to see the business savings accounts that will earn you the most money. Contact us to find out about the best business savings accounts* and how we can complete personalised calculations for your business to find you the one that will earn you the most money. The business savings accounts are a great way to invest any surplus or savings you have gained in your business. With the high interest rate you will be able to earn money on your funds while still having complete access to the money if you need it. It is handy to have these funds at hand as you will never know when you will need quick access to money. If you would like to know more about the best business savings account* then please contact us or follow our secure links to our comparison tables.

A savings account is a sound investment option, but before you open a business savings account you need to be clear about what you need the account to be able to do, and why you are choosing a savings account over another business investment option.

Shirley Liu

Shirley is finder.com.au's publisher for banking and investments. She is currently studying a Masters in Commerce (Finance) and is the author of hundreds of articles. She is passionate about helping Aussies make an informed decision, save money and find the best deal for their needs.

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14 Responses to Your guide to comparing small business bank accounts

  1. Default Gravatar
    Lana | December 12, 2015

    I am a sole trader and have a business account linked to savings and cheque account. I usually transfer money from business into savings, and than back to business for business expenses. I pay myself a wage from business into cheque account. I am not sure if this is the best way to go because my business account is showing all these back and forth transactions.
    Thank you.

    • Staff
      Shirley | December 14, 2015

      Hi Lana,

      Thanks for your question.

      In terms of obtaining business finance, these shouldn’t be a problem as the bank usually look at missed repayments, defaults, etc

      If, personally, you think that this is an issue then you may want to consider switching.

      Cheers,
      Shirley

  2. Default Gravatar
    Annie | March 19, 2015

    I am a migration agent working as a sole trader. under the law, I need to set up a so called “client account” (such name is required by the licencing authority) which is very similar to a “trust account”. this account – ” client account” is not allowed to attract any interest or bank fee. DO you have any recommendation as to which bank offers such account. I currently have one with commonwealth bank, but not happy with AUD 10 monthly fee which is deducted from my another account.

    Thank you.

    • Staff
      Shirley | December 14, 2015

      Hi Annie,

      Thanks for your question.

      Unfortunately at this current point in time we don’t compare business transaction accounts. You may want to try other sources.

      Cheers,
      Shirley

    • Default Gravatar
      Lina | April 13, 2015

      Annie do you found a better bank offer ? I have the same question at the moment, and I don’t want to pay 10 dollar every months

    • Staff
      Shirley | March 19, 2015

      Hi Annie,

      Thanks for your question.

      Please note that finder.com.au is an online comparison and information service and is not in a position to recommend specific products, providers and services.

      From our blue comparison tool above, you can see that there are a number of products that don’t charge any fees. Perhaps you could consider one of those.

      Cheers,
      Shirley

  3. Default Gravatar
    All | January 17, 2015

    wondering which bank would be best suited to an online business, as I am the owner of an online business and wanting the best account for transactions ect.

    • Staff
      Shirley | January 19, 2015

      Hi All Goods,

      Thanks for your question.

      Please note that we don’t recommend specific products, services or providers.

      There are a number of free or low cost advisory services available in Australia that provide advice and assistance to new businesses. You can use this tool to help you find the right advisor.

      Cheers,
      Shirley

  4. Default Gravatar
    JON | November 11, 2014

    Hi
    I have just started a small side business selling products online and i need a bank account for my project as customers are paying and transferring money online, I also need to transfer money overseas, can anyone recommend a bank here in Australia

    • Staff
      Elizabeth | November 12, 2014

      Hi Jon M,

      Thanks for your question.

      You can take a look at this page to read about multi-currency bank accounts and international transaction-enabled transaction accounts.

      I hope this has helped.

      Thanks,

      Elizabeth

  5. Default Gravatar
    Lynt | January 23, 2014

    Where on your site is the comparison list of business bank accounts etc??

    • Staff
      Marc | January 24, 2014

      Hello Lynt,
      thanks for the question.

      This page holds the current accounts available for comparison in the table above. We’re constantly trying to add more accounts to our comparison so our users can have a more effective experience. For more information on how to compare business accounts check this page out, and to compare business credit cards visit this page.

      I hope this helps,
      Marc.

  6. Default Gravatar
    Malcolm | January 10, 2014

    I intend to start and then progressively grow a property (dwelling) renovation business. The first one or two over an 18 month period will be as a sole trader situ and then most likely a trust for future more frequent/higher value projects. The longer term plan is to progressively buy renovate and then turnover quickly to minimise holding costs.

    What is the best banking product for my business. The purchase will be based on a 20% deposit (own funds) with balance borrowed from a bank.

    • Staff
      Marc | January 13, 2014

      Hello Malcolm,
      thanks for the question.

      Unfortunately we’re not able to provide personal advice regarding which product is better for you. I recommend comparing the various accounts in the market in relation to what you’re looking for, and then calling the providers of the accounts you’re interested in to find out more.

      I hope this helps,
      Marc.

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