Understanding bank accounts for sole traders

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

While it’s not a legal requirement in Australia, having a separate business bank account helps you stay organised and on top of your finances. It makes it easier to:

• track income and expenses for tax purposes
• manage cash flow
• present a professional image to clients and suppliers.

We’ve compiled some useful information about sole trader business bank accounts to help you understand what they are and how they work.

Can I use my personal bank account for business?

Technically, yes you can use your personal account. However, this can make bookkeeping and tax time more complicated. A dedicated business account helps you stay organised and avoid mixing personal and business transactions.

Why open a business bank account as a sole trader?

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 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.
• Business bank accounts can also integrate with your preferred accounting software, including Xero and MYOB.

How does a business account work?

A business bank account is designed for managing your business finances rather than personal transactions. It’s set up in your business name and is sometimes called a commercial or corporate account.

Business accounts make it easy to store funds, pay bills and manage tax payments and refunds. You can access your account through online banking, a mobile app, at a branch or by phone with support from business bankers.

Key features and benefits

Simple financial management via online banking or the NAB mobile app.

Foreign currency transactions, including making and receiving payments internationally.

Business transaction accounts for day-to-day operations, depositing money, paying expenses and managing cash flow.

Many accounts include a NAB Business Visa Debit Card for convenient access to your funds.

You can also use the Express Business Deposit (EBD) Service to deposit cash in a tamper-proof bag at any NAB branch with an EBD machine, Business Express Machine or EBD chute.

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 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.

1. Check your eligibility

• 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.

2. Gather your details

Have your ABN and personal ID ready. The information you need to supply depends on whether you’re a new or existing customer.

New NAB customers

If you are new to NAB or don't have an active NAB account, you’ll need to provide at least 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:

• 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.

3. Choose the right business bank account

Explore NAB’s business bank accounts:

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

4. Apply online in as little as 15 minutes

Account opening times may vary depending on your business structure and verification requirements.

5. Activate your account

Once approved, deposit funds and start using your account for business transactions.

Key takeaways

• You don’t legally need a business account as a sole trader, but it’s highly recommended.
• Using a personal account can make tax and bookkeeping harder.
• Opening a business account is simple and can help your business look more professional.