Why sole traders and mini business owners should separate their business and personal banking

Summary

A business bank account can have plenty of benefits for sole traders, side hustlers, freelancers, small and mini business owners. Discover how separating your personal and business finances can streamline financial admin, simplify tax time and give you access to financial products like high-interest savings and overdraft facilities.

The mini business mentality

Australia’s entrepreneurial spirit is everywhere – and the proof is in the 2.4 million 'small’ small businesses that are out there building things on their own. Whether you call yourself a side hustler, a freelancer, a sole trader, a start-up or you just have a handful of employees – you're one of these mini businesses working hard on your own terms.

But just because your business is smaller than others, doesn’t mean your financial admin is any less important – or challenging. 

Recent research from AMP Bank highlights that one in three mini business owners rate financial admin as their most difficult task, and two in five say administration time gets in the way of the day-to-day running of their business¹. Here’s where a business bank account can help make things easier, and even help support a business to grow and thrive. 

What are the benefits of a business bank account?

Crystal-clear finances: When you’re running a business, you want to see all your business expenses and payments in one spot – not mixed up with your personal payments. A separate business bank account can help track your income, expenses and cash flow with ease, and may make it easier to understand   your business earnings and your business expenses.

Less stress at tax time: If business and personal finances are neatly separated, tax time becomes much easier. You'll be able to see what deductions you need to claim with ease and avoid missing out on anything you can claim. Look for a bank account that can integrate with your accounting software to make things even more seamless.

Access to useful financial products: Your business banking account can open the door to a suite of valuable features to help you grow your business. Maybe it’s a business savings account with a high interest rate to grow your balance as it’s sitting in your account. Or maybe it’s an overdraft product, so you can easily access quick cash to invest in new tools or pay bills while you wait for payments to settle. Other business features that may benefit you include merchant facilities or bring your own device payment solutions so you can accept payments right on your phone or tablet, or if you need to travel for work, some business bank accounts give you access to travel reward points – with AMP Bank GO you can earn Qantas points on your monthly balance².

More time for you: Let’s face it, as a business owner, time is your most valuable asset. With the benefits listed above you'll have clearer insights into your cashflow, streamlined accounting data to save you from the chaos of last-minute number crunching, and considered features that can make your life easier – so you can focus more on what truly matters: growing your business.

Common misconceptions about business bank accounts

Despite the clear advantages of a business bank account, many sole traders, mini business owners and side hustlers are not sure if they should open one. Let’s tackle some of the most common misconceptions head-on:

“My business is too small for a business account” 

The size of your business doesn’t diminish the benefits of organised finances. Even if you're running a small-scale operation, separating your business and personal finances is a strategic move that sets the stage for growth and scalability.

“It’s just a hobby” 

Many side hustlers view their ventures as hobbies rather than legitimate businesses. While it’s wonderful to enjoy what you do, treating your activities as a business can unlock potential growth opportunities and protect your personal finances. A business account can be a step towards recognising and nurturing the growing potential of what you do, providing the structure needed for any future expansion.

“I don’t have an ABN” 

Some sole traders think that without an ABN (Australian Business Number), they cannot open a business account. While having an ABN is often recommended and beneficial for operating professionally, it’s not always a barrier to setting up a business account. However, obtaining an ABN is a straightforward process that can further legitimise your business and is worth considering as you grow.

“I don’t want the hassle” 

The thought of setting up a business account can seem daunting, with perceived complexities and time-consuming paperwork. However, many banks offer straightforward processes to open business accounts, with online options that simplify setup and management. The time invested initially can lead to significant long-term savings in both time and effort.

“It’s an unnecessary expense” 

 While there may be fees involved, the financial clarity, tax advantages and access to business-specific financial products can bring returns that far exceed initial costs. You can also look for low-fee (or even no fee!) accounts if you just want to dip your toe in the business banking world.

Considerations when opening a business bank account

When choosing a business account, you’ll want to consider how the account fits your current needs and future plans, ensuring it can support your business's growth.

• Fees: Look for an account with a fee structure that suits your business size and transaction volume.

• Transaction limits: Ensure the account can handle your expected transaction volume without incurring extra charges.

• Additional services: Consider accounts that offer online banking, mobile apps, payment solutions and other digital tools to manage your finances efficiently.

• Support and advice: Some banks provide dedicated 24/7 business banking support and advice, which can be invaluable as you grow.

How AMP Bank GO takes care of mini businesses

Built on innovative tech with smart features to help you grow, AMP Bank GO is business banking that helps you manage your money like a boss.

1. Zero monthly fees on transaction accounts*

2. Turn your business banking into Qantas Points with Qantas Business Rewards²

3. Simple savings, with none of the regular catches

4. Integrated accounting with Xero

5. Access merchant facilities and take payments on the go, using your phone

6. Switch between work and life in one tap

7. Organise your business finances with Spaces

8. Control your cashflow with business overdraft³

Want to know more? Get started here.