by Tash Hughes of
businesses are run on a tight budget, and everyone knows
that having an extra bank account will cost more in
fees. So how should a new business deal with its money?
Have a Business Account?
separate account for your business and personal finances
makes accounting much simpler. Your business records
will (hopefully!) tally exactly with the bank records if
the account is solely for business use. This helps you
keep track of where your business is, financially, and
be easier to prepare reports, tax returns and BAS
at least some of your income will be gathered in the
form of cheques, a business account also simplifies
deposits. A cheque made out to Business DEF canít be
accepted into your personal account; your invoices must
clearly state ďplease make all cheques out to R SmithĒ
and even then you may get DEF cheques that you canít
As a sole
trader, cheques made out to the business name and your
personal name can be accepted into your business
that all bank fees in your business account can be
claimed as expenses in your tax returns, too.
Business Account do I need?
Each bank and
credit union will have its own business account, or
accounts, for you to look at. All have a different fee
structure to those in personal accounts; you are likely
to have to pay a fee for each deposit, withdrawal and
It is best to
look at a number of accounts and compare them in terms
of your own business. For instance, if your business
will receive many cheques and pay out money
infrequently, an account with low deposit fees will suit
you better; a business receiving direct deposits or few
and large payments may not worry about low deposit fees
if the monthly fee is low.
at potential accounts too closely, plan out the types of
transactions you anticipate in each month. Having this
guide will allow you to make realistic comparisons
Some factors to
consider in choosing your business account are:
Deposit fees, including
additional charges for depositing cheques
Access modes (eg will
you get an ATM card?)
Is there a credit
option? Either credit card or overdraft facility
Withdrawal fees Ė
including for bpay, direct debits, over counter and
Convenience Ė where is
the nearest branch? Nearest ATM? Is it easy to transfer
to/from your personal account?
Can you access net
banking? Phone banking?
Costs for money
conversions if you have/expect many overseas
Does it pay interest?
Note many business accounts donít pay interest, or at
least not on small balances
cheque accounts incur a tax on every withdrawal. This is
a government tax and will be the same for all financial
do I get a Business Account?
Once you have
selected your account, you will need to visit the bank
and set it up. Some of the set up may be possible
online, depending on the bank, but there is paper work
to be handled that must be done in a branch.
accounts require a Business Name Search before it can be
fully operational. This is to check that it is a
legitimate business and that you have the right to set
up the account. Most places charge you $40 to $50 for
this, which is mostly a statutory charge for the actual
To open an
account you will need:
Copy of Business Name
Certificate (some places want this, others donít)
Copy of ABN
(100 points worth as per opening any account. Some
examples for this are your licence, passport, existing
bank account details, Medicare card, utility bill and a
Money for an initial
deposit. The money required will be at least $50 to
cover the name search; each bank will have a different
minimum amount depending on the account features.
A completed application
form with the name, address, contact details and birth
date of each account holder included.
Tash Hughes is
the owner of Word Constructions and assists businesses
in preparing all written documentation and web site
content. Tash also writes parenting and business articles for
inclusion in newsletter and web sites.