Why is a corporate bank account essential for business in Australia?

Why is a corporate bank account essential for business in Australia
Photo: Matthew Guay, Unsplash

Corporate bank accounts are accounts connected to your company, from which you can complete all financial transactions related to your commercial activity.

These are crucial for your business, as they make it easy to separate personal and commercial money flows. Australia has a highly reputable financial services sector, and can support healthy commercial activities and business confidence through their top-quality banking institutions. Find out how to get your corporate bank account and manage your money in Australia.

How do I get a business bank account?

Fortunately, you don’t need to be an Australian national to open your own business bank account. However, there are several steps you will need to take to get your corporate bank account up and running.

First things first: Form a company

If you haven’t done so already, you’ll first need to form a company in Australia, and register it with local government authorities. There are several legal structures in Australia to choose from, including:

  • Proprietary Limited Company
  • Public Company
  • Partnership
  • Branch Office
  • Representative Office

Once you’ve chosen your business structure, the Australian company formation process involves the following core steps:

  1. Choosing the legal entity type that best suits your commercial needs
  2. Drafting the bylaws for your company (essentially the company’s constitution)
  3. Reserve your company’s name
  4. Appoint officeholders
  5. Decide on the number of shares to be issued, their class and price
  6. Register your company with the Australian Securities and Investments Commission
  7. Obtain your Australian Business Number and if needed, and Australian Company Number.

With your approved company, name, documentation, and Australian Business Number, you can then open your corporate bank account.

Setting up your business account

Start off on the right foot by selecting the right kind of Australian bank account for your company’s activities.

Choose your account type

Across banks, companies can generally choose the following types of corporate accounts:

Savings account

Earn interest on your banked money with a corporate savings account. Interest rates for these accounts differ across banks in Australia, so you’ll need to research which offers the best rates and is the most convenient for your company in terms of location, accessibility, and terms and conditions.

Note that generally, banks ask for advanced notice of any withdrawals you intend to make from your savings account.

Transaction (check) account

This is a commonly-used account type to manage a company’s daily operations and transactions. You’ll use this account to receive payments from clients, and make transactions with suppliers.

A monthly rate will likely apply to this kind of account, or alternatively, banks may charge a ‘pay as you go’ rate for transactions. Monthly rates are usually AU$20 or less. Banks may charge extra (between AU$10-30) for international payments.

Term deposit

Configured like a savings account, a term deposit is a long-term savings option for businesses wanting to put aside a significant investment for a fixed term. Interest rates are fixed depending on the amount of money invested.

The intent if that the final amount (your investment plus interest) should only be withdrawn at the end of the term. If you need to withdraw money before the agreed-upon term, you’ll have to pay a penalty fee (either a fixed rate or percentage of the interest you’re earning). You’ll also need to give advance notice – this is typically 31 days.

Choose your bank

The four largest banks in Australia are a good place to start when choosing a bank: ANZ, National Australian Bank, Westpac, and Commonwealth Bank. These bigger banks generally have better coverage and accessibility across the country.

Due to their size, you’re also likely to get the opportunity to enjoy certain promotions for different services they offer.

Requirements for opening an account

Though bank procedures for opening an account may vary slightly, local laws around anti-money laundering and counter-terrorism financing outline clear requirements for each bank and account holder in Australia.

Fortunately, most banks have the capability to at least initiate your application online – for this step, you’ll need to provide your Australian Company Number. To show proof of your personal and company documentation, you’ll need to physically visit the bank’s branch.

For all business entity types and all banks in Australia, a company seeking to open a corporate bank account must identify all of the account’s holders and signatories.

Though some detail may change depending on the business structure, you’ll need to provide the following company information:

  • Company name
  • Company registration/incorporation date, and the Australian territory (state) it was registered in. You’ll need to provide the ASIC certificate of registration as proof
  • Business or trading name (if different from the company name)
  • Australian Company Number
  • Australian Business Number
  • The registered office and place of business for your company
  • A public document your company has issued, such as an annual audit.

If your company is connected to a foreign company (e.g. a parent company or branch), you’ll need to provide tax information on the overseas business.

Note: If your business is involved in offering financial services, additional licensing and documentation requirements may apply.

Personal identification for account owner(s) and signatories

All account holders and signatories must also provide personal information in the process of opening an account.

Essentially, they need to provide photo identification such as a current passport or driver’s license. If this isn’t possible, applicants have the alternative of providing two forms of non-photo identification. This includes documentation like citizenship or birth certificates. Each bank will outline acceptable forms of non-photographic ID.

US citizens have an extra requirement: They’ll need to provide their US tax identification number to open a corporate bank account in Australia.

Why do business in Australia?

Australia has demonstrated strong, consistent economic growth for the last 26 years, remaining largely protected from the 2008 global financial crisis. The country displays a wealth of high-performing industries and sectors, notably in agriculture, mining, finance, construction, health and education.

Australia’s political climate is stable, democratic, and open for business with the rest of the world. The country’s geographical position lends itself perfectly to multinationals looking at expanding into Asia. With strong international trade ties to one of the biggest and fastest-growing regional consumer markets in the world, Australia is the perfect springboard into exciting new opportunities.

The country’s finance industry is world-class, and as such, business confidence in money management is high. Investors and entrepreneurs looking at their options for expanding into a new, vibrant market should look to Australia to lead developed economies in technology and innovation uptake, and reliably strong economic performance.

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