How to open a business bank account in Australia

A business bank account is a commonly used phrase used in the world of fintech for a bank account that is used exclusively for managing your company's finances. In Australia, this is referred to as a business account.

Separating your personal and business transactions in a dedicated account simplifies accounting, helps you build credibility with customers and suppliers and gives you the overview you need to make better decisions about your business. It also helps you track your business income and expenses, making things like paying bills, handling payroll and managing your taxes much easier.

Not only does it make good sense from a money management point of view, but having a separate account may be a legal requirement if you’re operating a registered business, partnership or trust in Australia. 

While sole traders and freelancers aren’t legally required to have a business account, many choose to use one to keep their personal and business finances separate, organise their income for tax purposes, and boost their professional image.

In this article, we give you the complete lowdown on how business bank accounts work, what you need to consider before opening a business bank account and everything you need to get started with your own account. 

With so many account options on the market, we’ll also examine some powerful digital alternatives to the traditional bank account that are changing the ways that businesses manage their financial operations. 

What’s the difference between a Business Account and a Business Bank Account?

The difference between a business account and a business bank account is that the latter is provided by a financial institution that holds a banking licence, commonly known as banks.

A business account generally refers to an account and financial solution provided by a financial institution that does not hold a banking licence but does hold other regulated licences.

Many modern fintechs, like Airwallex or Wise, have opted not to become a bank. Airwallex is able to build a business account service that covers payment collection, treasury, transfers and payouts, invoicing, expense management and cards.

Can I open a business account (from a FinTech) alongside my business bank account?

Yes. Business accounts are great for getting started, borrowing and moving money domestically. Many businesses quickly realise the limitations and fees associated with their business account as they grow - especially internationally - and soon opt for fintech providers who offer purpose-built business solutions such as international payments, invoicing, company cards and expense management.

How to open a business bank account in 5 steps

1. Research and select a provider that offers services tailored to your needs.

2. Gather and prepare the necessary information including your Australian Business Number (ABN) or other proof of business registration and identification documents.

3. Apply online, by phone, or in person at a bank branch (depending on your chosen provider).

4. Your account provider will verify your documents and information and ask you for anything else they need to support the application.

5. Once verified, set up your account, add funds, get cards issued and get started.

How does a business bank account work?

Business accounts or business bank accounts are a hub for your business's financial activities where you can handle essential financial activities like depositing revenue, managing expenses, and processing payroll. 

They're not fundamentally different from personal accounts, but they do come with special features tailored to meet the needs of businesses. This means you can handle larger transaction volumes, possibly access business lending options (depending on your account type and provider), and enjoy other specialised services that might not be available with a personal account, such as the ability to issue employee cards and tools for financial analysis and reporting.

Banks and financial providers offer different kinds of business accounts, each with their own set of rules and perks and often customised to fit particular business sizes or industries. There may be specific benefits, and features aligned with business operations.

While there are many benefits, it’s important to check any fees or charges you may be up for. For example, business accounts may charge you for features like bank transfers that come free with personal accounts. If you’re looking to move money internationally for your business, there may be other associated costs with some accounts - and you might choose a provider that provides low-cost international transfers. 

What types of businesses open a business account?

In Australia, almost all registered businesses, from small startups to large corporations, choose to open business bank accounts - or a specialised business account from a non-bank financial provider - to manage their finances. 

Sole traders and freelancers, on the other hand, might opt not to open a business bank account if their business transactions are minimal or closely tied to personal finances. Even so, many of them will find that a business account or business bank account is a valuable way to simplify tax reporting and separate their personal and business finances for better financial clarity.

How do I choose the right business account for my business?

The range of business accounts offered by both established banks and non-bank specialist providers in Australia is vast. Business accounts come packed with features that not only streamline your operations but also offer numerous value-added benefits, making them an important part of your business’s success.

Of course, there are costs associated with opening and operating your business account which you will want to minimise, and these depend on the provider you select. 

Here are some factors to consider when weighing up your choices:

• Account and transaction fees: Review the account and transaction fees to ensure they're justified by the services provided. For small businesses, a fee-free account might work, particularly for online-only transactions. Alternatively, consider an account with a low monthly fee that includes some free transactions.

• International fees: If you’re sending and receiving money internationally, it's important to find a provider that offers competitive rates.

• Credit services:  If you need to access finance to expand or boost your cash flow, it’s important to consider accounts that come with affordable overdraft facilities and credit services.

• Local networks: Not all international banks have a presence in Australia, so if you choose one for your business banking, make sure they have a local partner bank that can help you out.

• Online services and customer support: Does the provider offer an easy-to-use online platform and, if you need it, a way to contact and access customer support to resolve any issues you might have?

• Business features: Will you be able to easily manage EFT, multiple and batch payments and integrate your account with your business management and accounting software?

What are the best bank accounts for small businesses?

Some important ways to help you narrow your search for a business account include looking for accounts with low or no monthly fees and penalty-free minimum deposit thresholds. The cost-effectiveness and flexibility of these options mean that your business can continue to make the most of its money with limited cash flow.

For small businesses, it’s much easier to have a separate business account or business bank account set up from the start. Then, as you start to grow, you’ll already have access to features like online payment processing and card creation. Also, it will mean that you save yourself the hassle of moving to a more suitable provider and changing your banking details with suppliers and customers. 

Of course, if you decide to get finance to develop your business, or assess its value if you want to sell, it’s much easier to have your finances set up and ready in a dedicated business account.

Which bank accounts are best for international businesses?

The right business account or business bank account does more than just simplify global transactions – it can propel your growth beyond borders. Opting for providers with tailor-made solutions for international businesses can give you the essential headstart needed to succeed globally.

For businesses with an international footprint or those aiming to expand overseas, the following types of accounts may be especially beneficial:

• Multi-currency accounts: These accounts allow you to hold, manage, and transact in multiple currencies without needing to convert funds back to your home currency, reducing exchange rate risk and currency conversion fees.

• Accounts with global banking networks: Banking with a provider that has strong partnerships with banks in other countries can make it so much easier to manage overseas transactions by fast-tracking the business banking process and letting you bypass the usual tangle of application procedures.

What documents do I need to open a business bank account in Australia?

For Australian business owners, setting up a business bank account or business account is straightforward but may vary slightly depending on the provider you choose. You'll generally need to provide your business registration details and information about your business structure and industry to help the provider match you with the best account type.

The documentation and details you’ll be asked for may include:

• Business name;

• Primary business address;

• Australian Business Number (ABN);

• Australian Company Number (ACN);

• Industry type; and

• Identification for all owners or partners.

In most cases, government-issued photo IDs like a passport or driving licence will be accepted, or a combination of other documents that show your identity and address together.

The application process is generally quick once you’ve submitted all the relevant documents and information. However, verification checks can extend the time taken to open your account and you might be asked to give more information or paperwork to support your application.

Non-bank providers (and many banks) will allow you to apply to open a business account online through a fully digital account application process where you upload and submit the required documentation before being verified.

5 things to consider before opening a business bank account

Before opening a business account or business bank account, consider these five important factors:

1. Fees and charges

It's crucial to carefully review the fee structure of any prospective business account. Look for details on monthly account maintenance fees, transaction fees (such as charges for transfers), and potential hidden costs like fees for excess transactions or early account closure. Understanding these fees helps you know what you’re liable for and ensure there are no surprises and that the account suits your budget.

2. Interest rates and benefits

Some business accounts offer interest on the balances maintained. Depending on the amount in your account, this can deliver a substantial boost to your business. Also, review other benefits that could support your business operations, such as discounts on business software, reduced rates on business loans, or cashback on corporate spending. These benefits can add value beyond the basic account functions.

3. Digital capabilities

Assess how you will access the services that are available with the account. Key features to look for include comprehensive online platforms, mobile app capabilities, and detailed financial reporting tools. Make sure these services integrate well with your business’s operational needs, like payroll management, expense tracking, and easy access to financial reconciliation.

4. Customer support

High-quality customer support is essential for handling the complexities that can come with business banking. Evaluate the availability and responsiveness of customer service options provided by the provider. This includes traditional phone support, as well as support channels like email, chat, or even dedicated account managers. Having a great support team on your side can save you significant time and frustration as your business grows.

5. Scalability

The business account you choose should be able to scale with your business growth. This means the account should accommodate higher transaction volumes and provide additional services as your business needs evolve. For instance, as your business grows, you may need enhanced credit options, more complex cash management services, or better international transaction capabilities. Check if the provider can support your business not just now but also in the future as you expand.

Why open an Airwallex Business Account?

Australian business bank accounts are useful but can also be limited and inflexible. An Airwallex Global Account is a dynamic business account alternative specially designed to make managing your finances easier and help your business grow.

It’s why Australian businesses of all sizes are flocking to Airwallex as a way to manage their business finances. They appreciate the convenience of having one platform to access low fees, multi-currency accounts, high-speed international transfers, borderless cards, expense management, and online payments. There are no account opening fees or minimum transaction requirements.

Plus, if your business has plans to expand operations overseas, or you do a lot of business with international suppliers, Airwallex provides you with the tools you need for hassle-free global financial operations. Sending and receiving money internationally is cheaper, at low rates that help you minimise your transaction costs. 

Global Accounts also function as local currency accounts in your name that come with local bank and branch codes and dedicated account numbers. They make it easy for you to receive funds domestically and internationally into your Airwallex account from multiple countries and regions without getting involved with local banks.

With Airwallex accounts, you can also relax knowing that your money is safe and secure with world-class information security standards and end-to-end encryption.

Our goal is to save you time, and we focus on getting you up and running within 1-3 business days after you submit all of the required business information.  After that, you have immediate access to your account and can start sending and receiving funds. Your account can also link directly to leading platforms like Xero, making it simple to sort your end-of-year financials.

How do Airwallex Business Accounts stack up?

Here’s a roundup to help you see how we compare:

Features and benefits: Set up multi-currency business accounts in a huge range of currencies, allowing you to send, hold, and receive foreign currencies without unnecessary conversions.

Virtual debit cards: Instantly create and use multiple virtual debit cards.

Physical multi-currency cards: Effortlessly order physical debit cards for your team and have them delivered immediately.

Expense management: Ditch the receipts and outdated software for a streamlined, automatic experience that your team will appreciate.

Accounting integrations: Keep your finances in check with seamless integration between your Airwallex Business Account and leading accounting software platforms, simplifying financial reconciliation.

Immediate access: Activate your account and start using it as soon as it’s verified, with no extended wait times or delays.

Skip the queues and paperwork and open your free business account with us today.

FAQs:

1. What key documents do I need to open a business account?

To open a business account or business bank account, you'll need several key documents: your business name, primary business address, Australian Business Number (ABN) or Australian Company Number (ACN), type of industry, and identification for all owners or partners. Ensure you have these documents ready to streamline the account setup process.

2. How long does it take to open a business account?

Application and verification times vary depending on the provider you choose (traditional bank or non-bank alternative) and the method needed to apply (in-branch or online). Modern non-bank alternatives can often get you up and running more quickly allowing you to answer key questions and upload documents online in as little as one or two business days.

3. Do start-ups need a business account?

Australian registered companies, partnerships and trusts are required by law to have a separate business account for tax purposes. No matter the legal status of your startup, however, you are setting yourself up for success by having a business account to manage your finances. It helps separate personal and business transactions, simplifies accounting, and elevates the professional image of your new venture, which can be crucial for attracting investors and establishing credibility with customers.

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) it is important for you to read the Product Disclosure Statement (PDS) for the Direct Services, which is available here.