How to open a small business bank account

Setting up your business is never an easy process, but getting a business bank account doesn’t have to be stressful. In fact, you’ll find you have numerous options to choose from, and the banks are competing to make the process as easy as possible for small business owners.

Why do you need a business account in the first place? Simply put, to give you some much needed separation between work and business life. It’s vital to keep track of which payments are professional and which are personal, and having a separate business account – even if you’re a sole trader – is by far the best way to do so.

So, here’s a look at how to open a small business account, with information on a few of the best options you’ll have in Australia.

Business bank accounts

A business bank account is a bank account designed specifically to manage business transactions or hold a business’s savings: there are business “transaction accounts” – like standard everyday bank accounts – and business savings accounts too. This article will be focusing on the transaction accounts you’ll need to get started.

Having a business account will enable you to keep track of business expenses, payments, money sent and received, and possibly provide somewhere for you to deposit cash if necessary. Although they may come with a variety of features, they won’t do your accounting for you: if you need further help with that, consider specialist accounting software like Myob or Xero.

Small business bank accounts

“Business” is a broad term, and different types of business have different banking needs. As you’d expect, a huge multinational company needs a different sort of bank account from a sole trader. That’s why there’s a separate category of “small business bank accounts”, for those dealing with relatively low figures or fewer transactions.

Sole traders, in fact, don’t legally need a business bank account at all, but it’s still a good idea to get one¹. Otherwise, you risk your accounts getting tangled up, and potentially losing track of what’s what.

Which small business account?

Here’s a look at 4 of the options you have when it comes to small business accounts. There are plenty of others, of course, but this should get you started, and give you an impression of what this sort of account should offer.

The information is correct at the time of writing, but may change in the future. Bear in mind, too, that CommBank, ANZ and Westpac all offer various different sorts of business accounts as well, not just the ones mentioned here.

Small business account fees

Maybe the most important factor is how much your business account will cost. Here’s an overview of how the same 4 accounts work in terms of fees. Again, the figures are correct at the moment but could change. It’s not a definitive list: there are potential additional fees for all these accounts.

As you’ll see from this, then, unlike with a standard personal bank account you can expect to face some service fees for your business bank account. To minimize them, you should think carefully about how many transactions – and what sort – you’re likely to make each month, and pick a plan that’s good for your particular situation.

The Wise account is a little different from the others in the table above: Wise isn’t a bank, so you can’t use it for stuff like cash deposits. However, for sending, receiving and holding money – especially if you deal with multiple currencies – it’s certainly worth considering as an option that’s pleasingly light on fees.

Opening a small business bank account

So, how do you set up your small business bank account? The first step, boring though it sounds, is to do your research. Take a look through a range of different banks, the different products they offer to businesses, and the differences in service fees. Consider other possibilities like Wise too.

For some smart longer-term planning, check out the bank’s business savings accounts, too: even if you don’t need one yet, you may well in the future. Having a savings account in the same place as your transaction account is a considerable convenience, so do check you’re happy with the products in this area that your prospective bank offers.

Once you’ve made your pick, start your application. It’s generally straightforward to open a small business bank account online, so you can do most of the process from the comfort of your own home. A good bank should have the phonelines staffed too, and of course you can always go into a branch and ask some questions in person, if you have a lot you want to ask about.

You will need to provide a few documents and details, though, likely including the following:

• Proof of ID – for all directors and/or major shareholders. Passports are ideal for this.
• Documentation about your business’s registration: a certificate of incorporation, or evidence of how your trust is set up
• The officially registered address of your business.

A simple alternative: Wise

Wise, as mentioned, isn’t actually a bank – but Wise Business still offers a range of features that can benefit any business, especially those with international clients or suppliers.

A Wise borderless account not only holds your money, but lets you convert your money between 40+ currencies, always at the real mid-market exchange rate, with only low and transparent conversion fees to pay. And the account also comes with virtual account details in several prominent international currencies: Australian, New Zealand and US dollars, euros, and British pounds. That means that you can both pay and get paid in all those currencies, just like a local. It’s a far cry from the hefty costs that bank charge for international transactions.

You also get a debit Mastercard, and other useful features for business include Xero integration, batch payments, and an open API so that you can automate payments and workflows if you want to. There’s no cost to open an account and no monthly fee either.

Whether Wise Business is all you need or whether it supplements another business account, it’s well worth considering as a valuable moneysaver when it comes to international transactions. Take a look now and see how much money it could save you.

Whichever account you opt for, once it’s up and running it should all go like clockwork. Just make sure you make the right choice at this early stage, so the fees don’t end up proving a problem.

Sources correct as of 28 - 29 Nov 2019