Written by Compare savings accounts
Are you looking to grow your savings? Compare a wide range of savings accounts with Savvy so you find the best deal in Australia and the highest interest rate to help grow your savings.
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Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.
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Whether you're saving for a future project or putting money away for tax, a business savings account can be a vital part of your operations as a sole trader or small business owner. But the trick is knowing which one suits your business best.
Comparing with Savvy helps you find an account that will boost your business savings and help achieve your goals. Read our comprehensive guide to find out how to compare and find the best account for your business.
What is a business savings account?
A business savings account gives you a place to earn interest on the money you're not actively using day-to-day. These accounts are specifically tailored for people who are self-employed and run their own small, medium or large business. As such, the funds in the account can only be used for commercial expenses.
Online business savings accounts are very common among institutions and allow you to freely make deposits and move cash between accounts. Depending on who you bank with, you may have to meet minimum balance requirements, which tend to be higher for business accounts. These savings accounts can also come with special introductory offers, allowing you to earn a high interest rate for a short period. This usually lasts for about six months before reverting to the much-lower base rate.
Because these accounts are strictly for business, you must have an Australian Business Number (ABN) or Australian Company Number (ACN) to open one. You have to be 16 years old to register an ABN in Australia. You will also have to supply your business’ address when opening an account.
How should I compare business savings accounts?
It’s not uncommon to be short on time when you’re running a business or working for yourself. That’s why Savvy makes comparing and finding the best savings account for your business dealings simple and fuss-free. When comparing, it’s important to zero in on the following variables in particular:
Interest rate
The higher your interest rate, the faster your money will grow. For instance, if you deposited $50,000 in an account with an interest rate of 0.5% p.a. and added $5,000 every month, you’d earn just over $2,000 in interest across three years. However, if your rate was 1.5% p.a., the interest you would earn over the same period would exceed $6,000.
Banks use introductory rates (also called ‘honeymoon’ or ‘teaser’ rates) to entice people to open savings accounts. These offers usually give the account holder a short burst of high interest before reverting to the base rate after three to six months. Comparing with us will allow you to find the best high and base rate on the market.
Balance requirements
You're usually required to keep a minimum balance in your business savings account. These conditions are often tied to you earning a bonus high interest rate and can start at $10,000. It’s not uncommon for banks to do spot checks on balances and you run the risk of having your account restricted if it’s under the agreed balance, so it’s important you choose an account with requirements your business can comfortably meet.
Minimum deposits
Some business accounts come with the requirement that you deposit a certain amount each month. Meeting these conditions will help you qualify for the bonus high interest rate. You’ll only lose interest for the month if you don’t make the minimum value of deposits, which only applies to one month and isn't permanent. You can use Savvy’s calculator to assess how much you need to deposit to reach your savings goal.
Monthly fees
These accounts generally boast few fees, but it’s still important to compare to make sure you’re getting the cheapest option. While they won’t charge you for account keeping or transactions, business savings accounts do often come with paper statement fees (up to $2.50) and a free for requesting a reprint of a past statement (also $2.50).
Access to money
Most business savings accounts will allow you easy enough access to your funds. However, you’ll most likely have to set up a linked everyday business account into which you can transfer money electronically. Comparing offers will ensure you find a set of access conditions that suit you. Other forms of business accounts, such as term deposits, make it harder to access your money.
What is the process of opening a business savings account?
Compare with Savvy
Learn the tips and tricks involved in comparing business savings accounts to find the right one for you. Get a visual representation of which account has better features, judging individual interest rates and fees. If you’re saving towards a target for a future project, you can use Savvy’s online calculator to determine how long you have to save to reach your goal.
Check your business is eligible
As long as you have a registered ABN or ACN, you can open an account. Private and public companies, partnerships, government entities and cooperatives are also eligible forms of business. It’s still worth checking the fine print to see if your business qualifies.
Apply online
Once you’ve compared and found the account you want, jump onto your institution’s website or visit a branch and apply. For tax purposes, you must have an Australian residence and be over 16 years old to open a business account.
Verify your business and ID
If you’re applying online, you can upload your photo ID through your chosen institution’s secure portal. Photo ID can take the form of a driver’s licence, a foreign or Australian passport or a Proof of Age card.
Open your savings account
Once you’ve ticked all the right boxes, your bank should post or email you a welcome pack which contains product information. Once you have your BSB and account number, you can start saving.
Why compare bank accounts with Savvy?
Our comparison service is free to use, meaning you can compare bank account offers at any time.
You can compare accounts and choose to open one online from wherever you are, at home or on the go.
By partnering with trusted Australian institutions, you can be more confident when comparing offers with us.
The pros and cons of business savings accounts
More frequently asked business savings account questions
How is the interest on a business savings account calculated?
Interest on online business savings accounts is generally calculated daily and paid monthly. This depends on who you choose to open a savings account with, though. The more frequently your interest is calculated, the faster your bank balance will grow.
What is the difference between a business savings account and a business bank account?
A business bank account can be used for day-to-day spending and to pay bills, whereas a savings account motivates you to put money aside and not touch it. As such, you will get a debit card with a bank account but not with a savings account.
Can I just use my standard savings account if I’m self-employed?
You could – however, it’s best to separate your professional and personal finances. This will make it easier to monitor income and expenses come tax time.
Can sole traders open a business savings account?
Yes, sole traders can open business savings accounts. Banks may require your Australian Business Number (ABN) or proof of your business operations to set one up.
Our Savings Calculators
Use our savings calculator to help you calculate how much you could save over a set timeframe based on different deposit sizes and frequencies.
It's crucial to have a clear idea of your monthly household budget to see where your money is going and where it could potentially be better spent.
If you're applying for a loan or need to know what your salary is for your tax return, you can use our annualisation calculator to work out what you'll earn this financial year.
Setting savings goals is important. With this tool, you can work out how much you'll need to deposit to reach your financial aims over a set timeframe.
Just as important as knowing how much to deposit is working out how long it'll take to reach your goals. This savings goal calculator can help you do just that.
