When starting a business you may consider setting up a business bank account to manage your business finances.
Do I need a business bank account?
The short answer is no, if you're operating as a sole trader you don't have to open a business bank account, but it's a great idea to do so. Read on for the details!
No legal requirement for sole traders
If you're operating as a sole trader, there is no legal requirement for you to open a business bank account. You can use an existing bank account in your personal name.
If your business operates as a partnership, company or a trust, then it must have a separate bank account for tax purposes.
Can't remember if you're registered as a sole trader, partnership, company or trust? Search ABN Lookup to find your entity type. You can search using your personal name, business name or ABN.
Benefits of a business bank account
While there is no legal requirement for sole traders to have a business account, it's still a good idea to open one.
With a business account, you'll find it easier to:
track and control your business expenses and income
extract the information you need to give to your accountant or to do your tax return yourself when tax time comes around.
It also helps to present your business in a more professional manner when dealing with your customers.
One account for business and private use
If you use one account for both business and private purposes, you must clearly identify any personal payments or expenses in your cash book. See the ATO's page Separate business income from personal income for more information.