Do I need a business bank account as a sole trader?

If you're a sole trader starting out or building your business, you might be managing your finances through your personal bank account. However, there are some very good reasons to open a separate business bank account, especially when it comes to tracking your business finances and controlling expenses and income.

We’ve compiled some useful information about business bank accounts and discuss how they can help you as a sole trader.

What is a business bank account?

A business bank account is used for your business transactions, rather than for personal finances. They are similar in functionality, but a business bank account, also known as a commercial account or corporate account, is set up in the name of your business entity.

Business bank accounts allow for the simple storage of business funds. Many give easy access to money, enable easy transfer of money to pay bills, and help handle tax payments and refunds. You can use a business bank account for online banking, via a mobile app at a branch, or by phone to receive support from business bankers.

How does a business account work?

Business bank accounts are like personal bank accounts but there are some additional features, benefits, and services available to business bank account holders.

Some of these features and benefits include:

• Seamless management of business finances via online banking or the NAB mobile app.
• Integration with accounting software to simplify business admin.
• Make and receive payments in foreign currencies.
  

A business transaction account, historically also referred to as a ‘business cheque account’, can be used to manage day-to-day funds, deposit money and pay for business expenses. These business transaction accounts can also come with a NAB Business Visa Debit Card, allowing easy access to your business funds.

Why do I need a business bank account as a sole trader?

It’s not compulsory to have a business bank account to manage your business’s finances, but it’s still a good idea.

Here are some reasons why you should open a separate business bank account as a sole trader:

• Keep accounts and finances organised and separate from personal usage.
• Track and control business expenses and income.
• Easily differentiate transactions associated with your business if you have a separate business bank account, to help simplify tax time.
• Enhance the reputation of your business with your business name featured on invoices and quotes for customers and suppliers, rather than your personal bank account information.

How can I use this account for my business?

A business bank account makes it easier to bank using the NAB Internet Banking mobile app.

Here are several ways to use your business bank account:

• Structure client and customer payments for deposit into your business bank account.
• Use the account for business expenses such as phone, utility, and travel bills.
• Make business purchases and expenses with the business account as they may be tax deductable.
• Set aside emergency funds and taxes in the savings account.
• Connect your NAB business bank account to accounting software.

How to set up a NAB business bank account

If you’re ready to apply online for a business bank account as a sole trader, here's what you need to know to get started, and what you can expect after your successful application.

1. Select your chosen business bank account

• NAB Business Everyday Account ($0 monthly fee)
• NAB Business Everyday Account ($10 monthly fee)
• NAB Business Cash Maximiser
• Business term deposits

2. Check your eligibility and information required

• Full business name as registered with ASIC and its registration date (if applicable). If your business name is not registered, use the full name that the business operates under.
• ABN (if any).
• You are living in Australia and an Australian resident for tax purposes.

3. Apply online in less than 15 minutes

Here’s what you need to apply for a business bank account as a sole trader.

New NAB customers

If you are new to NAB or don't have an active NAB account, you’ll need to provide at least one two of the following forms of ID:

• Australian driver’s licence
• Australian passport
• Medicare card
• Foreign passport.

Existing NAB customers

Save time completing the application and setting up your account. Provide your NAB ID and follow the application prompts to securely log into NAB Internet Banking.

Here's what you need to know:

• Your NAB ID is an 8-to-10-digit number that you use to log into NAB Internet Banking.
• You can find your NAB ID on the back of your NAB debit or credit card above the black strip.