6 Things to Consider When Opening a Business Bank Account

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Australia hasn’t had a recession in decades, which means it’s a great place to start a business. But as a business in Australia, it’s highly advisable to get yourself a business bank account as soon as possible. It safeguards your personal assets, reduces tax liabilities, and makes it easier to track business performance.

Now, choosing the right business bank can be a challenging task in the country. That’s because there’s an array of promising options!

So, in this guide, we’ve compiled the top factors that you should consider when opening a business bank account. These will help you navigate your way and pick the banking service best suited for your business.

1. Minimum Bank Balance

The first aspect you need to consider is the minimum bank balance required at all times. If the minimum amount required to keep the account active exceeds your emergency business funds, the bank is not a good fit for you.

In Australia, there are banks that require no minimum bank balance and there are some banks that require a minimum bank balance of $10,000 or so. So, browse your options thoroughly and ask about the minimum bank balance required before signing up for a banking service.

Also, note that if a bank requires a high minimum bank balance, it is likely to offer better discounts, offers, and overall service quality. On the contrary, the services of a bank that requires no minimum bank balance may be subpar.

2. Type of Business Account

There are three types of business bank accounts in Australia. These are:

  • Business savings account
  • Business transactions account
  • Merchant account

Each type has its pros and cons. Here’s a summary:

Type of Bank Account  Pros  Cons 
Business Savings Account
  • Competitive interest rates, allowing you to earn from your business savings
  • Easy fund transfers between transaction and savings accounts
  • Limited access to funds as there may be restrictions on the number of withdrawals
  • A transaction fee is applicable on ATM and over-the-counter withdrawals
Business Transactions Account
  • Unlimited free electronic transactions
  • Free cash withdrawals from ATMs
  • Convenient business debit card
  • Little or no earnings via interest rates
  • Monthly account fees
  • Some banks may charge transaction fees for over-the-counter withdrawals
Merchant Account
  • Faster payment processing improves cash flow
  • Increased sales due to convenience
  • Monthly account fees
  • Transaction fee applicable on each transaction, which adds up over time

 

Consider the nd features of each account carefully and pick one that best suits your business needs.

3. Interest Rate

If you opt for a business savings account, opt for an interest rate that helps you earn the best possible amount on your savings.

Most banks offer a rate of about 2% – 4% per annum. Some banks may even offer up to 7 percent and some may allow you to negotiate your own terms and conditions.

4. Bank Facilities

Banks offer a range of facilities associated with business accounts. Some facilities that you should actively seek are:

  • Business loans: These are financial products offered by banks to fund business needs. You can acquire these loans for purchasing equipment, expansion, inventory financing, etc. The terms of these loans, interest rates, and repayment schedules are tailored to suit the business’s needs and creditworthiness.
  • Lines of credit: It is a flexible form of borrowing that gives businesses access to a predetermined credit limit. You can withdraw funds as needed up to the approved limit, similar to a credit card. This is useful for managing cash flow fluctuations and unexpected expenses. The interest rates on the borrowed amount and repayment terms may be adjusted to your business’s nature.
  • Cash management services: These services basically help businesses efficiently manage cash flow and optimise liquidity. For example, automated cash sweeps transfer excess funds in a transaction account to a savings account or an interest-bearing account. In this way, the business doesn’t lose its money-making opportunity.
  • Online banking: It allows business owners and authorised employees to view account balances, monitor transactions, initiate bill payments, and manage various banking activities online.

Note that some of these services are not offered to personal accounts. This is yet another reason why you should separate your business bank account from your personal account.

5. Bank Reputation

It’s also important to research the bank’s history, financial stability, and reputation. Browse customer feedback and explore the positive and negative experiences reported by customers.

If there are more positive reviews than negative ones, it’s a green signal and you can trust the bank.

When it comes to negative reviews, we recommend paying attention to the type of issue reported by customers. If they are complaining about slow online banking, that’s okay. But if there’s even one person complaining that their bank account got hacked and the banking service did nothing to help their case, you should be very vigilant about it.

 

With that said, we recommend trying out these reputable banking services for your business needs:

  • Westpac Banking Corporation (WBC)
  • Commonwealth Bank of Australia (CBA)
  • National Australia Bank (NAB)
  • Australia and New Zealand Banking Group (ANZ)

Remember, banks with long-standing experience in serving businesses are likely to have a better understanding of the unique needs and challenges faced by business customers.

6. Customer Service

Lastly, consider the responsiveness of the bank’s customer service. Ideally, a good banking service should respond within a few hours and help resolve your issue within 24 hours. Plus, if a bank offers dedicated teams and relationship managers for personalised assistance and guidance, know that it’s top-notch!

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Disclaimer: The opinions expressed in this article are the personal opinions of the author. Mediatimes is not responsible for the accuracy, completeness, suitability, or validity of any information on this article. All information is provided on an as-is basis. The information, facts or opinions appearing in the article do not reflect the views of Mediatimes and Mediatimes does not assume any responsibility or liability for the same.
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