Our Pick Of The Best Business Bank Accounts For Australian Small Businesses

Experts recommend that every small business owner set up dedicated business accounts as soon as they start trading, to make record-keeping and tax-time easier to manage. When you’re in a partnership, trust or company structure you’re legally required to separate your business banking from your personal accounts.

If you’re earning regular income from your small business activities and hope to increase revenue or expand over time, it’s best practice to open:

• A business transaction account to accept payments and pay for everyday business expenses. Most business transaction accounts are designed for unlimited free electronic transactions, with a linked bank card. Typically you’ll pay more if you want to bank in person or deposit cash and cheques.
• A business savings account to tuck away a portion of profits to cover future tax and superannuation liabilities, and help you save up for larger expenses. Business savings accounts let you earn variable interest on your savings: some might have conditions that impact the rate you’ll receive.

You might also consider a business term deposit to earn a higher rate of interest on business funds you won’t need to use in the near term—as you can’t access money held in a term deposit for the length of the term (e.g., six months or three years).

Note: The below list represents a selection of our top category picks, as chosen by Forbes Advisor Australia’s editors and journalists. The information provided is purely factual and is not intended to imply any recommendation, opinion, or advice about a financial product. Not every product or provider in the marketplace has been reviewed, and the list below is not intended to be exhaustive nor replace your own research or independent financial advice. For more information on how Forbes Advisor ranks and reviews products, including how we identified our top category picks, read the methodology selection below.

We gave preference to small business bank accounts based on:

• Products offered by established and credible Australian authorised deposit-taking institutions with a solid customer base and strong reputation.
• No account-keeping fees and unlimited electronic transactions, plus reasonable, transparent fees for non-electronic and non-standard transactions.
• All-in-one accounts that combine low-cost everyday transactions with the ability to earn interest on balances without onerous conditions or complex fees.
• For savings-only accounts and term deposits, the ability to earn a rate of interest at the higher end of the market.

It’s important that you read all product disclosure statements and terms and conditions for the products you shortlist, as we may not have taken your banking needs into account.

Regularly setting aside a portion of your earnings in a separate business account helps you manage payments including:

• Goods and Services Tax (GST), which you’ll need to be registered for once you start earning $75,000 or more from your small business. That means every quarter you’ll need to submit a business activity statement and pay the 10% of tax you collected back to the government.
• Pay as you go (PAYG) instalments, which are designed to spread your business tax payments over the year. As a sole trader or individual trustee, you’ll be required to make PAYG payments if you: made $4,000 or more in business income (gross) on your latest tax return; had tax payable of $1,000 or more, or have estimated tax of $500 or more.
• Superannuation and PAYG Withholding (PAYGW) for people who work for you which can include company directors and independent contractors. You’re required to cover the 11.5% super guarantee rate for any workers at least quarterly, and you’ll also need to withhold a certain amount of tax on salaries you pay. PAYGW is due quarterly for businesses that withhold $25,000 or less, and monthly if you withhold between $25,000 and $1 million.
• Large annual business expenses such as software subscriptions, professional body or industry body memberships, and for business insurance such as public liability, professional indemnity and workers’ compensation insurance.

Chartered accountant and partner at Carbon Group, Michelle Maynard, says you should also try to save for “rainy day” expenses like unexpected bills as well as purchases that underpin your future business plans, such as the cost of new equipment.

Most Australian businesses employ fewer than 20 people, which is generally how a small business is defined. But according to the ABS data around 30% of Australia’s 2.6 million businesses are sole proprietors.

If you’re a sole trader, you can choose to use your personal bank account for business transactions. However, mixing business and personal banking can make it more difficult to:

• Analyse your cashflow and progress toward revenue goals so you can adequately assess the true costs of running your business; and
• Accurately identify business incomings and outgoings when completing your tax return in order to know what you can claim.

You may feel and look more professional with a separate business transaction account, which can be important psychologically (for you) and increase your credibility with clients. Also, some Australian banks have been known to close personal accounts when they notice they’re being used for business purposes.

Michelle Maynard says a good alternative to a business savings account for sole traders is saving on the interest paid on your mortgage through an offset account.

“Interest on savings accounts are important, however if you are a sole trader with a mortgage, I would recommend using the offset on your mortgage as the savings account,” she said.

You risk paying more or missing valuable features if you automatically open business bank accounts with the same institution you use for personal banking.

You can choose to do your business banking with a broad number of banks, credit unions and customer-owned banks including the “big four”, leading challenger banks and online banks. Banking with any authorised deposit-taking institution in Australia means the money held in your accounts, up to $250,000 in total value, is protected under the Financial Claims Scheme (the FCS) in the rare case that an institution fails.

To compare small business bank accounts, pay special attention to:

• Fees: When your margins are small, reducing your expenses is key to freeing up cashflow. Zero account-keeping fees is great, but be certain this benefit won’t be offset by other fees on features you need. For instance, if you regularly accept cash and cheques or want to bank in person it may be worth paying a $10 per monthly fee if it includes a number of free “non-electronic” transactions where the costs would quickly add up to over $10 otherwise.
• Interest rates: The higher the interest rate on offer in a business savings account, the quicker your savings will grow. There may be interest rate tiers based on balance amounts or bonus or introductory rates that only apply short-term: be realistic about how much savings you’ll be able to accumulate. Also note conditions such as the requirement to open a linked transaction account, minimum deposits, limits on withdrawals, or available withdrawal/transferral methods.

Other factors that may be important to you as a small business owner:

• Whether the bank is digital-only or has physical branches.
• Ability to integrate bank feeds with your accounting software.
• The bank’s cybersecurity features and digital banking/app usability.
• Built-in tools to track, visualise and analyse expenses or savings goals.
• Overdraft availability, establishment fees, limits and interest charged.
• Whether the account has real-time settlement features like PayID.
• Whether you can use a digital wallet like Apple Pay or Google Pay.
• The ability and ease of adding and managing multiple signatories.

If you want to accept card payments in person or online via a website—now or in future— you may wish to research the bank’s services and fees related to merchant facilities. You don’t have to go through your bank to set this up but it may be convenient. Check the available EFTPOS terminals or ecommerce payment systems, what costs are involved, and typical settlement timeframes.

While the features and fees associated with an account are important to consider, convenience and peace of mind often play a role for small-business owners deciding where to bank. Plenty of people go with well-known banks due to:

• Dependability, given that large players are considered solid businesses with reasonably broad yet stable product offerings.
• Customer service, with the greater likelihood of larger banks having physical branches and well-resourced business banking teams.
• Better digital experiences through sophisticated and continually evolving online banking platforms and mobile applications.

Many banks offer an online application process, especially for sole traders and trusts/companies run by individuals. Generally you need to be at least 18 years old to apply and during the application process you may be asked to provide:

• Your personal details and contact information.
• One to two valid forms of identification like a driver’s licence, Medicare card, birth certificate or passport.
• Details about the kind of business you run.
• Your ABN/ACN and registered business name.
• Your personal or business tax file number.
• Names and contact details of any other directors, beneficial owners or trustees.

Additional editing: Kevin Pratt