How to open a business bank account in Australia

Australia’s natural resources, business friendly climate, and familiar working culture, make it a popular place for expats to start businesses. Throw in the weather and laid back lifestyle, and it’s an appealing option, whatever your line of work.

In fact, 44% of people in Australia are employed by small businesses, with a further 24% working at medium sized enterprises. These companies are the backbone of the economy and their success and growth is encouraged by the government.

If you’re considering opening a business in Australia, you'll have lots to think about. One thing that might be playing on your mind is how to open a bank account for your new company. Don’t worry, though, this need not be too difficult.

Here’s a guide to showing what you need to get started.

What types of corporate entities are there in Australia?

Australian law recognises the following business entity structures:

• Sole trader

• Company

• Partnership

• Trust

Each business type is different, but the basics are clearly explained on the Australian Department of Industry, Innovation and Science website. Although it's not compulsory to have a specific business account if you operate as a sole trader, it's good practise to do so. If you have a company, partnership or trust, then you must have a business bank account in order to operate.

Can I open a business bank account in Australia with a foreign corporate entity?

To open a business bank account in Australia, your business must be registered in Australia and hold an ABN/ACN registration number.

What’s the process for opening a business bank account in Australia?

Each bank will have their own specific requirements to open a business bank account - however, you will most likely need to have the following:

• Proof of the ID of the directors of the company, and any shareholders with more than 25% holding. Banks operate a ‘points’ system, meaning that you can provide different documentary proof as long as it adds up to sufficient points. Passports and photo ID cards, for example, rank highly in the points system, and presenting a passport and driving license would get you enough points to get started.

• Certificate of incorporation or business registration, or documentary evidence of the creation of your trust.

• ABN/ACN registered office address for your business.

If anyone involved in the creation of the business is a US citizen they'll be required to provide a tax identification number and if the business is involved in financial services, additional licensing details may be required.

It may be possible for a company to nominate one person to certify signatories to the account. This means that only one person has to provide the full range of documents and can then authorize other colleagues to access the account.

Can I open a business bank account as a non-resident?

It’s not necessary to be a resident of Australia to open an account there. However, to open a business bank account, the company must be registered in Australia.

If you have any doubts about what account is suitable for you, talk to the ‘Big Four’ banks listed below as they’ve a broad range of specialized products and may be able to help.

Can I open a business bank account from abroad?

Australian banks will allow you to apply online for a business bank account, and then present the documentation needed in the branch later. This makes it possible to at least start the process of opening an account before you arrive in Australia.

There may be limits on the account until you have completed the document verification process - for example, you may be able to pay cash in, but not make withdrawals.

If you already have a registered business in Australia or hold a personal bank account with an Australian bank, you might find that you can open your business account online while still abroad.

Can I open a business bank account online?

It may be possible to open your business account online.

The Commonwealth Bank of Australia, for example, offers online verification for new customers opening some Business Transaction accounts. ID and company registration details can be checked online in real time, to speed the process up. However, this service isn't available on all products.

Which bank should I choose?

Australia's four biggest banks have good branch and ATM coverage across the country, making them a solid choice for your business account. Each offers slightly different accounts, with periodic promotions (like free banking for new customers for a limited period). The ‘Big Four’ are listed here:

• National Australian Bank

• Commonwealth Bank

• ANZ Bank

• Westpac

National Australian Bank

National Australian Bank (NAB) offers a fee free business account, which allows for free cash withdrawals from networked ATMs in Australia, as well as a host of other perks. There are also specialized business accounts, for example if you want an interest bearing product. As one of the largest banks in Australia, you'll have access to over 1,500 branches and 3,400 ATMs.

Commonwealth Bank

The Commonwealth Bank's regular business bank account costs $10 a month to run, with some additional transaction charges depending on usage. You can open an account online although you'd then still be required to present documents in branch if you’re a new customer.The Commonwealth Bank operates across the region, and the UK, and has over 1,100 branches worldwide. There are also over 4,300 networked ATMs.

ANZ Bank

ANZ Bank is Australia’s fourth largest bank, and has two ‘everyday’ business bank accounts on offer, including a ‘low fee’ option. There are also several more specialized banking products depending on your personal needs. Conveniently, the bank website has a comparison table with all the important facts about the accounts, including fees and charges.

Westpac

Westpac has a range of different business bank accounts, which run from low fee basic accounts to those designed for larger and more active businesses. There are various offers and promotions attached to the accounts, including free banking for new customers. There are 1,429 branches and 3,850 ATMs in the Westpac network.

Banking fees and charges

Before you open your business bank account in Australia, it's important to read the terms and conditions carefully - especially in relation to banking fees and charges.

It’s common to find monthly account handling charges and fixed fees for banking transactions. Even when these fees look small, they can build up over time. Some banks offer to reduce or waive the fee for new customers, which might be worth considering.

From time to time, most businesses need to make international money transfers for things such as paying suppliers based overseas. This can be an expensive process and many banks don't offer a good deal to their customers on transactions like this.

Often they'll add a high initial ‘admin’ charge for processing the transaction, as well as steep transaction fees. These may be fixed fees or a percentage of the amount transferred.

But even if the listed fees look quite low, your bank will make their cut on the deal. Instead of a transparent, up-front fee, you might find that your bank’s profit is rolled into a poor exchange rate. If your bank applies an exchange rate which is worse than the real, mid-market rate, then you lose out as the true cost of your transfer is higher than it needs to be.

To make sure your bank isn’t taking an extra cut, you’ll want to use an online currency converter to check the actual value of your money before you transfer internationally. If you do make a transfer, you might consider using an alternative service like Wise. Not only does Wise already offer the true exchange rate you can find on Google, but since your international transfer is made with two local transfers in each respective country, large SWIFT transfer fees are also cut out, leaving you with more money in the end.