Managing a banking business account is a common practice for many companies and entrepreneurs in Australia. For the majority of them, the selection of the financial organization is carried out not by the owner or director, but by responsible managers. How well this choice was made is difficult to assess without some knowledge. In this article, Bankchart.com.au will teach you how to compare business banking accounts. So, you will be sure in such the decision of the responsible manager, or make the own one and choose the best business account from variety proposals of Australian banks, like ANZ, NAB, Commonwealth Bank, Westpac, Bankwest and others.
Step 1. What is a business banking account? What are the kinds of accounts?
A business bank account is a financial account for small companies, entrepreneurs and corporates for business activities, enabling them to obtain payments for goods and services from their clients, pay bills from the suppliers or buy equipment and vehicles or other assets, pay salaries and taxes. Such accounts also assist you in managing your revenues, expenses and other cash flows and also to keep accounting records.
A business account is required if you are registered as an entrepreneur, limited liability, corporation or trust. But you can be content with a personal banking account if you are a freelancer or do some services in addition to your full-time work. To open a business account, a company must be registered in Australia and have an ABN code. Before making an application, you should appraise the level and the kind of future transactions (e-transfers, ATMs withdrawals or checking) to choose the tariff plan, which will fit you best.
There are such types of business accounts:
- Current – for making transactions, like e-transfers or withdraw in ATMs
- Deposit – for making a company's investments in the form of savings accounts or term deposits
- Credit – for servicing banks loans, like overdrafts, credit lines, loans against collateral or credit cards for its staff
- Niche accounts – developed for companies from some industries, for example, farms, trade companies or firms with international affairs
- Paypal business account - helps to transfer your website into an online shop. Accepts Visa, MasterCard and American Express cards. You can make and transfer invoices online. The account fees depend on the type of operations and are rather competitive.
Opening a current business account you will receive the following advantages:
- Comfortable online banking for making transactions and to form statements
- Keep your personal transactions separate from business, so tax payments are easier to calculate
- Assists to manage and to analyze your company’s cash flow
- Provide you with additional services like accounting software or antivirus programs
- Larger operation limits comparing to personal accounts
- Multiple access to the account management can be provided, for example, for a director and several accountants
- A possibility to obtain short-term financing, for example, in the form of an overdraft
- Extra perks from a bank, like MYOB exporting, financial reviews from experts, online advice from the bank’s managers, different useful seminars and webinars, etc.
But, after opening the account you will bear additional expenses, which by our research can range from 0 to 22 AUD per month or can be even higher.
Step 2. How to compare business bank accounts?
Before opening a current account, you should consider such parameters so that the additional costs will not be a surprise for you in the future:
1) The monthly servicing commission – according to our research its size can vary from 0 to 22 AUD per months. The more operations and perks are included in a tariff plan – the higher will be the periodic fee. The commission can be waived if you keep a particular balance on the account (like 10 000 AUD) or deposit a certain sum per month (for example, 50 000 AUD)
2) The limit of free operations – expensive tariff plans can include unlimited quantity of chargeless transactions while the cheapest ones may have only 5-10 per month or even zero. Also, it is essential to specify whether such option is constant or works only for a promotional period of time and what kinds of transactions does the limit include (e-transfers, withdrawals, statements, etc.)?
3) E-transfers – by our research, they usually take from 0 to 0,50 AUD per operation. They are divided to transactions among the bank or to other banks. This tariff can be included in the monthly fee or to be paid separately
4) International transfers – such a tariff is important to companies with foreign contracts. The commission can be established in the form of the percent of the operation or a fixed sum of money
5) Withdrawals at a branch and checks cashing – can be rather expensive. According to our tariffs investigation, the fee size can vary from 0 to 5 AUD per operation
6) Withdrawals at ATMs – withdrawals at the native bank’s ATMs can be free, while at the other banks may cost 0,2-3,65 AUD per service and 2-5 AUD at abroad ATMs
7) The level of interest rates – usually Australian banks pay no percentage rates on business current account but there may be exceptions. By our survey, the size of percentage rates can vary from 0 to 1,2% per annum. The banks are more likely to pay interest revenue if the owner provides increased balances on the account
8) The minimum balance – the banks generally don’t establish limitations on the minimum balance on their business current accounts but can increase the balance value if the client wants to receive higher interest income on his funds
So, do not be lazy to do a little research before applying to a bank. Australian banks usually place information about the mentioned above tariffs on their sites. But to find out all the nuances of the future servicing in the bank it is better to take a copy of the account agreement at a branch.
Step 3. How to get the most from a business bank account?
To get the most out of the account servicing in a bank, you should also consider the following features and options:
- The overdraft facility – does the bank provide with the possibility to establish a credit line on your business current account?
- A savings account – ask the bank manager whether the financial institution has a savings account connected to the current one, with increased interest rates
- The branch and ATMs network – does the financial organization have enough points, especially not far from your company and places of living of your staff
- The online banking – is the program convenient for your accountants and have all the necessary functions? Can it be integrated with your book-keeping software, like MYOB, Wiise, MYOB or Xero? How many managers can have access to the current account via the program?
- Corporate and salary banks cards – does the bank provide such products? What is the cost of such servicing?
- Additional perks – does the bank provide free bonuses, like business insights, free credit cards to the firm’s personnel, useful free webinars and others
Step 4. How to apply for a business bank account (online)?
When applying for a business bank account, Australian banks usually require passing identification and a check for both the responsible manager and the company.
So, the manager must provide to the financial organization one of the following documents:
- Medicare card
- birth certificate
- Australian driver’s license
- utility bills
While the firm must fit the following requirements:
- to provide a certificate of registration of the company
- to have a registered address
- to possess a valid ABN or CAN
- to provide a tax file number
- to give information about the directors and major shareholders, who own 25% and more of the capital (full name, contacts, etc.)
- to have a positive business experience without bankruptcies and fraudulent transactions
- also, some additional documents of the company may be required, like share certificates, the orders about the appointment of directors, the company’s constitution, licenses (if required by law), etc.
If the account is not opening by the director but the responsible manager, he must also provide the document authorizing him to open the business account on behalf of the firm.
Filling the application and sending the mentioned above documents, as a rule, can be done online. But, if you haven’t been the bank customer before, you will also have to visit the bank’s branch to finish the application and providing the originals of the documents. Australian banks can demand fewer data from small firms and sole proprieties.
After providing all the data, the bank will check it and open you a current account within 3-5 days. Before that there can be some restrictions, set by the bank. For example, the firm can be enabled to receive payments from its clients but without the possibility of paying bills and making withdrawals.
So, to sum up the above, a current business bank account is a good way of obtaining payments for goods and services, paying different bills, purchasing assets, paying salaries and taxes. It also assists you in managing the company’s revenues, expenses and keeping accounting records.
Before opening a current account, the responsible manager must consider the following tariffs and limits: the monthly servicing commissions, the limit of free operations, e-transfers, international transfers, the cost of withdrawals at a branch and checks cashing, withdrawals at ATMs, the level of interest rates, the minimum balance, etc.
To get the most out of the account servicing in a bank, the director should also consider the overdraft facility, savings accounts, the branch and ATMs network and their location, the online banking features, corporate and salary banks cards possibility, additional perks.
You also must pass identification and the bank will also check the company's activities when applying for a business bank account.