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Setting Up Business Bank Accounts

There’s no way you can avoid banks when you’re in business. If you want to get paid, you need a bank account. For paying bills, you need access to online banking unless you like queueing up in the post office. So, how do you set things up for maximum convenience?

If you’re just getting started in your own business you might be tempted to get invoices paid straight into your regular everyday account for convenience. That’s what I used to do and it came back to bite me. The best way I found to deal with this was by putting a modern spin to a financial management system from a bygone age.

When I was a kid, my mother stayed home to look after us and my father, who was a very organised guy, gave mum the weekly housekeeping money – it was kept separate from our savings so that spending and saving didn’t cross over. Then, my mum would compartmentalise that money further so that weekly groceries, daily-ish milk and bread, clothes and other expenses were separated.

At a minimum I’d suggest each business needs two bank accounts – one for incoming funds and another for tax payments. If you’re registered for GST, then pulling the GST out of each payment as it arrives and putting it in a separate account means that you’ll already have the money for the tax man. If you draw money for yourself from the incoming funds, then I’d also pull another 20% out along the way to cover any personal income tax liability you might incur when you file your annual return.

So, how do you choose bank accounts? If you’re a registered business, banks will need to see some documentation to prove you’re eligible for a business bank account. In my case, my accountant provided me with a “Bank Kit” that had all of the required bits of documentation.

As I had a pre-existing relationship with a bank through my mortgage that seemed like the right place to start. I set up two accounts – one for incomings and another for tax.

Choosing you bank and accounts isn’t easy but the same rules apply as with personal accounts. For me it came down to low fees (for my tax holding account, there are no fees but there’s also no interest), a decent internet banking system and a good mobile banking app for my smartphone. With those tools I’m able to track accounts and manage my money from just about anywhere.

One thing I’d highly recommend — don’t give your primary business account a debit card. If the account is somehow hacked it’s your money that will be lost. Even if the bank reimburses you, there may be some time while you’re out of pocket.

If you think you need a credit card, then get a separate credit account. That way, if the account is compromised it’s not your money that’s at risk — it’s the bank’s. It’s not surprising that banks like us to have debit cards. However, a credit card does require discipline.

Combined with the right accounting package I can manage my accounts and banking from just about anywhere on almost any device.


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