What is the difference between a business account and a personal account?

A business bank account allows you easily manage your business’ expenses and income. Personal bank accounts help individuals to access and manage their personal funds. If you're a small business or a sole trader starting out, it's a good idea to open a separate a business bank account, and the sooner the better, even if you run your business part time. 

Benefits of a business bank account

Many small business owners use their existing personal bank accounts, but there are benefits to opening a separate and dedicated account to manage your business finances.

Let’s explore the main benefits of opening a separate business bank account.

Spend less time and money on admin

When tax time comes, it'll be easier to get your books in order if you have a separate account for your business. You won’t have to spend hours trying to work out which transactions were for your business. If you use a bookkeeper or accountant to do your tax, you won’t have to pay them to sort out what’s business and what’s personal.

Link to other business accounts and accounting software

If you have a business bank account you can link other accounts like a business credit card or a merchant payment device, making managing all your transactions smoother. Once your business starts using accounting software, having a separate business account will make bookkeeping a lot easier. That’s because many accounting packages can integrate directly with your bank account, to automate a lot of the bookwork. You could connect software like Xero, MYOB or Quicken to a NAB Everyday Business Account, which has no monthly fees.

Track your business expenses and income easily

With a separate business account you’ll find it much easier and simpler to track your expenses, income and profit. You’ll be able to quickly look at the numbers and then make decisions about where to invest your time and money, and where to reduce expenses. If you run your business through a personal bank account, you’ll have to find a way to work out all these things, and that can be difficult and time-consuming.

Prepares your business for the future

It’s much easier to have a separate bank account set up from the start, so you won’t have the hassle of changing it later on. If you start with a personal account then swap to a business account, you'll have to tell your suppliers and customer to change the banking details they have on file for you.

Also, with a business account you’ll be better prepared to get your books in order. This'll make it easier if you decide to apply for a loan or obtain finance to expand. It'll also make it much easier for your business to be valued, should you consider selling it.

Deductions for tax time are easier and simpler

A separate business account can make it a lot easier to identify and deduct any bank fees from your tax liability. When tax time comes you won’t have to sort through various accounts to sort out business fees from personal banking fees.

Even if your business journey is just beginning, getting a separate business bank account can prevent unwanted hassles in the long run.

How to choose the best bank account for your business

As a small business owner or sole trader, selecting the best business bank account is crucial for managing your finances efficiently. Whether you’re just starting out or looking to switch to a better option, understanding your business’s banking needs is the first step to making an informed decision. Let’s dive into the three key essentials that will help you make the right choice.

Analyse your small business banking requirements

Identify your business banking needs by thinking about your day-to-day financial activities. Do you deal with many transactions? Are you mainly receiving payments or making purchases? How will you handle the management of cash flow and payment processing? Understanding these aspects will help guide you towards the account that seamlessly fits in with your business operations.

It’s vital to evaluate your transaction volume and frequency by keeping tabs on your transaction patterns. By analysing how often and how much money flows in and out of your account, you can ensure that you won’t hit any transaction limits or be slapped with unexpected fees. For example, the NAB Business Everyday Account has no monthly fees and is ideal for businesses with low transaction volumes.

Equally, you should also consider your business credit requirements. Whether you’re eyeing an overdraft for emergencies or planning to expand with a business loan, make sure the account you select aligns with your credit needs. This will help set your business up for success in the future.

Weigh up different business bank account types

Compare the account features of each business bank account type such as transaction fees, interest rates, account accessibility, and any additional services that may be on offer. Determine the best small business bank account for you by taking a closer look at what each one brings to the table and compare them to discover which one is most aligned to the priorities of your business.

Use our online tool to find the best small business bank account for your business by comparing product features, benefits and fees and charges.

Interpret the influence of fees and charges

Fees can add up quickly if you’re not careful. Be aware of common charges like monthly fees, transaction fees, and international transaction fees. Knowing what to expect can help you budget effectively, so it’s important to utilise strategies that minimise fees and charges such as maintaining minimum balances, using electronic banking services, and bundling services that may help you qualify for fee waivers.

NAB understands the unique financial needs of small businesses and offers a range of flexible banking solutions designed to help you succeed. See our guide to business banking fees and charges to learn more about the costs associated with each business banking account type.

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Get in touch

Contact us

Visit our business banking contact page for how-to-guides and FAQs, as well as contact numbers.

Visit a NAB branch

Our business bankers are located all around Australia.

Important information

The information contained in this article is correct as of July 2018 and is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial, and taxation advice before acting on any information in this article.