Business Savings Account

If you’re running a business and want to build a strong cash reserve, you can compare your savings account options with Savvy.

Last updated on June 24th, 2022 at 12:28 pm by Kurtis Eichler

Compare and find the best business savings account

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. As such, comparing with Savvy is your best bet for finding a high yield savings account. You can even use our savings calculator to see how much interest you’d earn at different variable rates.

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.

Pros and cons of business savings accounts

PROS

Earns interest on your savings

These business-oriented accounts give you a place to earn interest on your company’s money while it’s not being used. These accounts tend to be high yielding with competitive rates, allowing you to further boost your balance.

Paves the way for business finance approval

Being able to demonstrate a steady savings history is one of the signs of a good borrower. You can use your business savings account as proof of your savings track record when applying for finance to expand your operations.

Helps you expand and grow your business

By having a secure place to store your savings, you can save for much-needed equipment or infrastructure that can help grow your business and increase your profits.

Save for tax time

One of the perks of a business savings account is you can tuck money away for your upcoming GST or tax payments, making your end of financial year hassle-free.

CONS

Monthly account requirements

These accounts usually come with various hoops you have to jump through to achieve a higher interest rate, such as minimum deposits and balances.

Won’t come with a debit card

You won’t get an ATM card with this type of savings account, meaning you’ll have to set up a linked everyday account to access your funds.

Less return than shares or property

These accounts have a much lower rate of return when compared to share portfolios and property. If you’re looking to aggressively invest, the stock market may be a better option (albeit at much higher risk).

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.