How to Open a Business Bank Account in Australia

TransferWise
09.09.19
8 minute read

If you’re considering setting up a business in Australia, you’re not alone. The number of Australian businesses has been rising slowly but steadily for the past few years, to the point that there were more than 2.3 million active in June 2018.

And if you’re not a native to Australia, you’ll be pleased to learn that you’ll have plenty of opportunities all the same. A remarkable 1/3rd of small businesses in Australia are run by migrants, according to a report by the insurance company CGU.

Those small businesses, of course, take all shapes and forms – but one point is common to the lot of them. If you’re setting up a business, you’ll need a business bank account. It’s obligatory for most types of business, and strongly recommended in any case. This article will give you some tips on how to choose the right one.

What are the typical corporate entries in Australia?

As in most countries, businesses in Australia can take various different forms. Here are the most common structures:¹

  • Sole trader: a sole trader is an individual, responsible for the whole thing. It’s most common to think of sole traders as individual freelancers, although sole traders can also employ people.
  • Partnership: this is somewhere between a sole trader and a company: various people (or entities) can associate together on a partnership without forming a company.
  • Company: a company is a standalone legal entity with a more complex business structure. Companies have limited liability: your personal assets aren’t considered part of the company unless you invest them in it.
  • Trust: trusts are not commercial operations, but rather operate for the benefit of others. Charities often fall into this category.

The type of business you operate will affect the process of opening an account.

Can I open a corporate bank account in Australia with a foreign corporate entity?

Not really, no: your business will need to have a presence in Australia with all the appropriate registration. Of course, the company could be a subsidiary of a foreign company.

Also of course, your Australian company can do business with foreign entities. Which may mean a lot of international money flowing into and out of your corporate bank account.

That’s a good thing in essence, because it opens up many exciting opportunities. But one potential downside is losing money via poor deals on international transfers. Especially if you make a transfer using your bank, you can end up paying substantial fees as well as losing out thanks to bad exchange rates. The same process in reverse might mean you receive less money from international clients, too.

And that’s why TransferWise can help. In addition to your business bank account, TransferWise for Business can give you an international borderless account, for no monthly fee, that allows you to receive money directly in Australian, New Zealand and US dollars, euros and British pounds: for the business paying you, it’ll be just like a domestic payment. You can also hold money in 40+ currencies, and send money out widely as well. All conversions are done at the real mid-market rate, and fees are kept to a minimum.

Take a look now – it could save you and your business a lot.

What’s the process to open a corporate account?

The opening process varies from bank to bank, and you’ll need different details depending on what sort of business you’ve set up. But these two stages should be common in all cases.

  1. Before you set up the account, register your business and make sure you have all the appropriate numbers, such as an ABN or ACN.
  2. Select your bank and account type – a few of your options are listed below – and fill in all the necessary forms.

How long does it usually take?

It’ll depend on the bank in question: they all have their own systems. Bear in mind that they may need to check your details, review your application and so on – it’s not as simple as opening a personal bank account. So you’d be wise to allow plenty of time.

Which documents/requirements are necessary?

Again, it’s the bank that determines exactly what documents you have to show, but there are a few requirements that are legally necessary. Expect the following:²

  • You’ll have to be the owner or one of the directors
  • You’ll need to provide your ABN or ACN (sole traders may not need this)³
  • You’ll need to provide contact details for all directors – typically address and/or email and mobile number
  • You may need to provide personal ID documents too. If you’re already a customer of the bank in a personal capacity, you might be able to skip this step.

Can I open a business bank account online?

In some cases, absolutely. Bear in mind that it’s a somewhat complex process, though: the bank will likely need to check your details and contact a few people, so it probably won’t be the instantaneous online experience we’ve come to expect.

Also, banks do have varying rules about this. In some cases you might need to take documents into a branch in person. Another reason to leave yourself plenty of time to get it all sorted.

Can I open a business bank account as a non-resident?

Yes, you should be able to get a business bank account even if you’re not an Australian resident. But it will make the process more complex, and – as explained above – your business will need to be registered properly in Australia. You can’t just randomly choose to have a business bank account in Australia if you’re living and working in, say, France.

Banks may have their own rules too. NAB, for instance, won’t let people who aren’t permanent Australian residents open a business bank account online.⁴ There’s still the option of going into a branch, though.

Can I open a business bank account from abroad?

Again, it depends: if you meet all the criteria, there’s no reason you can’t begin the process online – or maybe even via phone – while you’re abroad. But the business itself will need to be active in Australia, even if you yourself currently aren’t.

Which bank should I choose?

Australia has plenty of choice when it comes to banks: the traditional “Big 4” are all options, and there are plenty more besides. Here are a look at some of the best business bank accounts in Australia, although it’s not a definitive list by any means. Take a look and see if any of them look right for you and your business.

Commbank Business Transaction Account

Commbank, or Commonwealth Bank to give it its full name, had the largest network of bank branches in Australia as of 2016, with more than 1,000 across the country.⁵ No surprise, then, that it has a solid offering when it comes to business accounts.

The Business Transaction Account costs $10 per month, for which you get 20 free transactions, unlimited electronic transactions, free cash withdrawals from Commbank ATMs in Australia, and the ability to use all the latest features like Google Pay, Apple Pay and Samsung Pay.

Look out for special deals: you can get the $10 monthly fee waived if you use one of their EFTPOS devices on a particular plan of theirs.⁶ For bigger operations, there’s a Premium Business Account as well.⁷

ANZ

ANZ has fewer branches – around 600⁸ – but remains one of the country’s largest banks. It has 2 transaction accounts for small businesses: the Business Advantage and Business Extra accounts.

An ANZ Business Advantage account will cost $10 a month, just like Commbank’s Transaction Account. You get unlimited transactions on the house. Standard internet banking is included, but you will have to pay $15 monthly for ANZ Internet Banking for Business, a more specialist product.⁹

If you go for a Business Extra account, you’ll get Internet Banking for Business thrown in, and the whole thing will cost $22 per month.

NAB

NAB, which is another of the Big 4 and has more than 900 locations globally¹⁰, does something truly tempting: they offer a business bank account with no monthly fee. But you might find it works out cheaper to take the alternative option and pay the $10 monthly fee.

The account is called the NAB Business Everyday Account, whether you pay $0 or $10 per month. If you choose the free version, you’ll find yourself paying $2.50 for all banker-assisted transactions, and $0.60 for both cheques and non-banker-assisted paper deposits and withdrawals. Electronic transactions, on the other hand, are free.¹¹

All of those transactions are free if you pay the $10 monthly fee:¹² the decision really comes down to whether or not you’re going to make most of your transactions online or not. If online works well for you, then the $0 monthly option might be ideal.

Other options with NAB include a Business Interest Account. It’s a transaction account, but aimed at businesses with high sums and few transactions – as the name suggests, your business can earn interest on the balance.¹³

Westpac

The other member of the Big 4 is Westpac, which has over 1,000 branches worldwide.¹⁴ Westpac offers 3 primary options for businesses: Business One Low Plan, Business One High Plan, and Business One Flexi.

The Flexi option is a bit like NAB’s option with no monthly fee: Westpac describes it as “pay as you go”, meaning that instead of a monthly service fee you just pay for the transactions you make.¹⁵ Business One Low is $10 per month, though if you sign up online you can currently get the first year free. For that $10, you get unlimited online transactions plus 25 other transactions on the house before you start having to pay.¹⁶ Business One High gives you 60 free staff or cheque transactions for a fee of $20 per month.¹⁷

Business One Low and High both come with various perks including the free invoicing tool Biz Invoice.

Other options

Don’t imagine that the Big 4 is the complete list of possibilities. Other banks you might want to consider are Bankwest, BOQ, GreaterBank, Heritage Bank, St. George, and BankSA.

Banking fees

As you can see from all the options above, there’s no getting around fees when it comes to business banking. Some of the accounts waive the standard monthly fee in some cases, but generally speaking that means paying on a per-transaction basis. If you run a shop or any other business which involves a lot of cash, that might not be an ideal solution, although for online-based operations it could work pretty well.

As you’d also expect, it’s possible to pay more for more premium services. The more expensive business accounts are generally targeted at larger operations, and give those companies the flexibility they require.

Fees for international money transfers

Whatever the monthly fees you end up paying for your business bank account, there’s another potential fee that you’d do well to read up on. International money transfers are a regular occurrence for many businesses, small or large, yet they can end up costing the earth.

That’s not just because of the fixed fees that banks often charge for them: it’s also because of exchange rate markup. Don’t forget to check what exchange rate the bank offers you: if it’s not the mid-market rate, you’re losing out, and less of your money will make it through the transfer.

That’s why TransferWise can be so useful: whether sending or receiving money from abroad, a borderless account will ensure that money is always converted at the mid-market rate, and can be withdrawn into your bank account for a minimal fee. Whatever business bank account you end up with, this might be a way to save just that little bit extra.

Sources:

  1. https://www.business.gov.au/planning/business-structures-and-types
  2. https://www.nab.com.au/business/accounts/apply-for-a-business-account, https://www.commbank.com.au/business/banking-and-cards/bank-accounts/business-transaction-account.html?intcmp=BUS0067
  3. https://www.commbank.com.au/business/small-business/documents/sole-trader-checklist.html
  4. https://www.nab.com.au/business/accounts/apply-for-a-business-account
  5. https://www.commbank.com.au/about-us.html?ei=CB-footer_about-commbank
  6. https://www.commbank.com.au/business/banking-and-cards/bank-accounts/business-transaction-account.html?intcmp=BUS0067
  7. https://www.commbank.com.au/business/banking-and-cards/bank-accounts.html
  8. https://shareholder.anz.com/our-company/business-structure/australia-retail-commercial
  9. https://www.anz.com.au/business/products/accounts/transaction-accounts/business-advantage/
  10. https://www.anz.com.au/business/products/accounts/transaction-accounts/business-extra/
  11. https://www.nab.com.au/about-us
  12. https://www.nab.com.au/business/accounts/transaction-accounts/no-monthly-fee-business-account
  13. https://www.nab.com.au/business/accounts/transaction-accounts/low-fee-business-account
  14. https://www.nab.com.au/business/accounts/transaction-accounts/nab-business-interest-account
  15. https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/Westpac_2018_Annual_Review.pdf
  16. https://www.westpac.com.au/business-banking/bank-accounts/
  17. https://www.westpac.com.au/business-banking/bank-accounts/one-account/?pid=iwb:dp:BOLctaFOM_1711::link
  18. https://www.westpac.com.au/business-banking/bank-accounts/business-one-high-plan/?pid=iwb:dp:BOHctaFOM_1711::link

All sources correct as of 24 July 2019


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