Maybe every manager does his best to increase the incomes of his company. There are a lot of ways of doing this, but probably the simplest one is to open a business savings account. At first glance, it is easier to do than, for example, to increase the productivity of production, develop a new product, launch an effective advertising campaign, but not so simple as it seems. When choosing a deposit account, the responsible manager has to analyze a variety of price and non-price product parameters, for example: servicing commissions, transaction limits, the size of interest rates, requirements to the account balance, the frequency of the interest repayment, early withdrawal fee, access to online banking and many others. It is also very essential to select a financially stable bank. What of a variety of them to choose? Should it be one from the largest ones, like Commonwealth Bank, NAB, ANZ, Westpac, Citibank, HSBC or another one? What are the requirements for the owners and the business to open a savings account? What documents to prepare? In this article, Bankchart.com.au will help you in this difficult stuff.
Step 1. What is a savings business account? What are the types of such accounts in Australia?
A commercial savings account enables trusts, partnerships or entrepreneurs to gain interest revenues on free funds. Such an account is usually connected with the firm’s day-to-day account. A company usually can easily transfer funds from their business savings account to the transaction one without any commissions and penalties.
Usually, Australian banks set increased requirements to the minimum balance to get percentage incomes for these accounts. Such limitations can be differentiated by financial organizations – the higher is the balance the greater rate will the bank offer.
Such accounts can’t be opened by an individual, but only by businesses. A firm must have an Australian Business Number (ABN) and/ or Australian Company Number (ACN) to open a business savings account.
Banks offer such kinds of commercial savings accounts:
- Term deposits - provide for the placement of a specific amount of funds for a certain fixed period. If a firm desires to withdraw the deposit before the maturity date, the bank will charge a penalty. They can have a replenishment option. The interest revenues usually can be repaid monthly, quarterly, half-yearly, annually and at the end of maturity. By our research, the level of the interest rates ranges from 0,2% to 3% and depends on the financial organization, the balance size (the higher is the sum, the bigger is the rate) and the frequency of repayment (the less frequently the interest is paid, the higher is the rate)
- Standard savings account – provide free access to the placed funds and have an increased rate comparing to the transaction accounts, but not as high as on other savings products for business. According to our investigation, the rates on standard savings vary from 0,01% to 2,2% annually
- Savings packages – provide possibilities of making transactions and withdrawals and also have high interest rates, but they are not cheap
- Bonus accounts propose higher percentage rate if the client fit particular conditions, for example, provide a certain balance or there are no withdrawals from the account during a month or the customer is a farmer
Having a commercial savings account provides you with such advantages:
- You will receive a higher comparing a transactional account interest passive incomes
- The firm can get an increased percentage rate fitting specific proposals from the financial organization
- Australian Government Guarantee protects the invested money up to $250,000
- Free accesses to your placed funds
- Low or no servicing and transaction commissions
- A great variety of the proposed periods and frequency of repayment
- Stimulates to save up money for force majeure and investments
- Business savings accounts make it easier to take loans in the future
But such accounts can also have some restrictions like:
- Financial organizations may set increased requirements to the minimum balance on such accounts
- Fees can be established on some operations, for example, withdrawals or transfers to the
Step 2. How to compare business savings accounts?
Before applying to a commercial savings account, the responsible manager should find out the following product parameters to consider all necessary factors to select the best deposit for your firm:
1) Access to your funds – savings accounts usually provide you with the possibility of free replenishment and withdrawals of funds, while on the term deposits banks often charge penalties to the interest rate on such operations
2) Servicing commissions – by our investigation Australian banks seldom charge fees for savings accounts. But it will not hurt you to check the availability of fees for the following operations: transfer money to the savings account from the day-to-day account, withdrawals, administration of the account, etc.
3) Transaction limits – the banks can establish limits on the sum of operation or the transaction quantity, for example, not more than 3 withdrawals per month
4) The size of interest rates – according to our research Australian banks are ready to pay from 0,01% to 3% annually. The level of percentage rate depends on the possibility of replenishments and withdrawals of funds, the size of minimum balance and the frequency of the interest repayment
5) Requirements to the account balance – banks can establish limitations to the business savings account balance, for example, not less than 1 000 AUD and not more than 5 000 000 AUD. Some accounts have a differential rate depending on the balance size
6) The frequency of the interest repayment – financial organizations offer your firm to get the percentage revenues on a monthly, quarterly, semi-annually, yearly basis or at the end of the maturity date
7) Early withdrawal fee – this parameter is relevant more relevant for term deposits, as savings deposits usually don’t have such a commission
8) Access to online banking – it is more convenient to open a deposit and making operations by Internet
Also, you should determine whether your company needs a term deposit or a savings account. The first one fits for large-term investment goals. For example, if you need to purchase some equipment in a year or more and don’t want to take a bank loan. The second one will suit more if your company has a short-term surplus of funds, for example, for a week before paying the salary and wants to gain additional percentage income.
Step 3. Peculiarities of servicing business banking account?
The responsible manager should also consider such features of servicing commercial savings accounts, choosing one of them:
- Taxation – the director should take into the account that, the percentage revenues are subject to tax
- Business savings account – can't be used for personal goals
- Multiple access – some commercial savings accounts provide management access for several responsible peoples at the same time
- The quantity and the locations of departments and ATMs – does the bank have enough points of sales near the residency of the firm and its personnel
- The Internet banking program – can the responsible manager easily transfer funds from the transaction account to the savings one and backward
- Additional privileges – does the financial organization offering free perks, for example, business markets surveys, helpful webinars, free antivirus programs and financial software
- The government security – the commercial savings up to 250 000 AUD are protected by the Australian authority
Step 4. How to open a commercial savings account in Australia(online)?
In order to open business savings account both management and a firm must fit a bank’s requirements, like:
- The director/owners:
- To be eighteen years old or older
- To be a resident of Australia
- The company:
- To have a transaction account in the bank
- To be an Australian firm
If you suit the mentioned above requirements, the responsible manager can fill the application online or in the bank’s branch. The first variant better suits for those, who have already relations with the bank, while the second one for new customers.
After filling the application, the owners and the company must pass the identification and provide to the bank’s manager the following documents and data:
- The authorized managers/owners:
- Australian passport
- birth certificate
- driver’s license
- The firm:
- the company’s address
- the certificate of registration of the company
- the Australian Business Number
- the Tax File Number
- other important data, like a certified copy of the trust deed, the decrees about the appointment of managers, licenses, etc.
After opening the savings account you must transfer the minimum balance by the Internet banking program or its mobile application. After that, you can use higher interest rates and gain additional percentage profits.
Before opening business savings account it is important to consider the goals of the investments and its parameters like the period, sum, the need for replenishment and withdrawals, the frequency of the percentage payment and others. It will help you to define the type of the account (term deposit, standard savings account, savings packages, bonus account) and the necessary conditions.
To choose the best business savings account, the responsible manager should consider a lot of price and non-price parameters, like: access to the funds, administrative and transaction fees, limits of operations, the level of percentage rate, requirements to the account balance, the frequency of the interest repayment, early withdrawal fee, access to online banking, etc.
Also, the authorized manager should take into consideration such factors to choose the best savings account: the availability multiple access, the quantity and the locations of departments and ATMs, the Internet banking program and additional bonuses.
When opening the account you not only should fill the application but also to pass the identification of the owners and the business and to provide the necessary documents.