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Business vs personal bank accounts: how to choose

Q: Can I use my personal account for business expenses or my business account for personal expenses?

No, it’s not recommended that you use your personal bank account for business purposes. Nor should you use your business account for personal expenses. Separating your business and personal financials may help you avoid legal issues or problems with recordkeeping.

Q: Can I use my personal transaction account if I own a company?

No, if you’re registered as a company, you will need to have a separate bank account for business finances using your business name as soon as you start handling business transactions.

Q: Can I use my personal bank account as a sole trader?

You’re not required to have a separate business bank account as a sole trader, but separate accounts are still a good idea. A dedicated business account can help you separate business and personal expenses and manage your business finances more easily.

By QuickBooks Australia

June 29, 2023

Getting paid as a business owner is rewarding, but after you celebrate those hard-won sales, you may have this question: Where should that money go?

Can you put it in your personal transaction account? Do you need to have a separate business transaction account? What are the rules?

Keeping your personal and business finances separate is a smart idea to maintain accurate records, understand your business’ financial health and make informed decisions. Even further, those separate accounts might not just be a recommendation depending on your business, they could be a requirement.

Use these links to jump to a specific section, or keep reading to learn more about business vs personal bank accounts.

What’s the difference between business and personal transaction accounts?
Business transaction account benefits
How to find which transaction account is best for you
What do you need to open a business transaction account?
Business transaction account FAQ

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What’s the difference between business and personal transaction accounts?

Man holding debit card using personal checking account next to a business.

A business transaction account helps business owners hold and manage money made within a company. Personal transaction accounts help individuals hold and manage their personal funds. Some of the main differences include:

Business bank accounts have more legal protections than personal bank accounts, meaning you won’t be offered protection from business liabilities when using a personal transaction account for business expenses
Business bank accounts can do a better job at solidifying your brand
Personal bank accounts and business bank accounts have a different fee structure

Individuals who operate under a trading name or as a company will have to open a business transaction account that’s separate from their personal transaction account.

Here are a few key factors of a business banking account:

Includes a business transaction account
Allows you to make payments from the account, transfer money electronically and use a business debit card
Helps you separate savings from working capital
May require a minimum deposit and/or balance requirements and monthly fees On the other hand, personal transaction accounts are intended for personal funds

Personal fund activities include:

Depositing pay from an employer
Paying personal expenses, including mortgage and phone bills
Debit card purchases
Transferring funds to personal savings accounts
Withdrawing money from an ATM
Gifts and personal payments to friends, family and acquaintances

Why should I consider a business bank account?

When it comes to business vs personal bank accounts, opening a dedicated business bank account can help you:

Safeguard your business funds by separating your personal finances
Easily monitor your business spending
Create more realistic budgets
Practise better bookkeeping habits that keep your business finances organised
Help you get a business loan, line of credit or a business credit card when you need one

In short, even if a separate account isn’t required for your business, it’s still a good idea to get one. We’ll explore these benefits in depth below.

Can I use the same bank for personal and business banking?

Yes! When choosing a bank for your business bank account, many people start with financial institutions they know and like. If you have a personal bank account in good standing, you may get a better offer on a business bank account at the same bank.

Many banking institutions that offer consumer or personal bank accounts also offer business banking services. However, reviewing the specific features of a business bank account is always a good idea before you sign up.

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It makes sense for business owners to separate their bank accounts for business and personal use. Here are a few business bank account benefits that you should consider.

Accurate accounting

When you open a business transaction account, you are able to keep closer tabs on your cash flow. When you blend the two accounts, it’s common to get confused with funds moving in and out frequently. Separating your business transactions will also reduce stress for your bookkeeper, resulting in more accurate accounting.

Streamlined tax reporting

You can take the hassle out of tax reporting when you have a separate business transaction account. Save the headache of sifting through all your transactions to decipher which are personal or business expenses. With an unconnected transaction account, you will have a built-in record of all company spending.

Asset protection

Dividing your business and personal spending into two accounts can protect your assets from potential debt or fraud. If you blend the two into one account, a court could go after your personal funds if you run into legal issues with your business.

Business vs hobby legitimacy

The Australian Taxation Office (ATO) requires you to report all income, but a combined transaction account could falsely categorise your company as a hobby instead of a legitimate business. Keeping your funds separate and providing a paper trail of business transactions would help prove you are running a fully-functioning company.

Enhances your professional brand

Your image and reputation are critical as a business owner. For example, your clients may see you as a more established business if payments go directly to a business transaction account vs a personal account. By opening a business transaction account, you could also expand your line of credit or chances of taking out a small business loan in the future due to establishing trust.

Business transaction account factors to consider

woman using a magnifying glass to look at bank account requirements.

Deciding which business bank account is best for you is a big decision. As a business owner, you will want to look at the key features of both types of bank accounts. Here are some things you should consider:

Fees: Most business banking accounts have monthly and annual fees. Make sure to look for one that waives or reduces the monthly fees if you maintain a certain amount.
Minimum deposit and balance requirement: Some business banking accounts require a minimum opening deposit amount and maintaining a certain balance. It’s best to find an account that doesn’t require a large deposit or high balance requirement.
Interest rates: The highest interest often provides the highest return on investment, but it shouldn’t be the only priority when choosing a transaction account. Most accounts with high interest rates also come with increased monthly fees that could cancel out your earning potential.
Transaction limits: Certain banking accounts restrict the number of deposits and withdrawals you can make each month.
Employee debit cards: You can give your employees limited access to your business banking account for company purchases. However, not all banks offer this perk. It would be beneficial to choose a business banking account that offers employee debit cards.
Online services: With new technology on the rise, certain banks offer online services. Manage your funds and get all your banking down in the comfort of your home or office. However, not all online banks have physical branches in every town, so make sure to check to see if your business bank has a location nearby.
Sign-up bonuses: While sign-up bonuses aren’t standard at most banks, certain business banking accounts will offer new customers cash bonuses for signing up, making a certain deposit and maintaining a specific balance.

What do you need to open a business bank account?

Illustration of business bank account documents.

One of the biggest differences between personal vs business banking accounts is the application process and requirements.

Nearly everyone can open a personal banking account, but to open a business banking account you will need to produce various forms of documentation such as your business licence.

Keep in mind that the exact documentation required will vary depending on the bank you are applying to and your overall legal structure. Sole traders typically use their own personal information, while companies need to provide more business-related documentation in addition to personal information.

Business banking account FAQs

Still not sure about the ins and outs of business vs personal transaction accounts? Check out some frequently asked questions to ramp up your understanding of these bank accounts.

Can I use my personal account for business expenses or my business account for personal expenses?

Can I use my personal transaction account if I own a company?

Can I use my personal bank account as a sole trader?

Do you need business revenue to open a business transaction account?

No, you do not need to earn money or show proof of profit before you open a business transaction account. Opening a separate bank account for your business should be one of the first steps you take as soon as you start your company.

However, keep in mind that some business transaction accounts require a minimum deposit amount when you sign up. Make sure you read the terms and conditions before opening your business account.

Final thoughts

While personal transaction accounts are great for storing your funds, opening a separate account for business expenses could serve a larger purpose. Business banking accounts allow you to legitimise your company, streamline bookkeeping and protect your assets. Making the switch could greatly enhance your overall business.

Now that you have more information regarding business vs personal transaction accounts, you are ready to enhance how you run your company. If you are looking for other ways to manage your business expenses, check out QuickBooks for seamless insights into your business finances.

This content is for informational purposes only and information provided should not be considered legal, accounting or tax advice or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or territory. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does it have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.

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Business vs personal bank accounts: how to choose

Your new business toolkit

What’s the difference between business and personal transaction accounts?

Can I use the same bank for personal and business banking?

Feel confident from Day One

Grow Your Business with QuickBooks

Accurate accounting

Streamlined tax reporting

Asset protection

Business vs hobby legitimacy

Enhances your professional brand

Business transaction account factors to consider

What do you need to open a business bank account?

Business banking account FAQs

Final thoughts

Free New Business Toolkit

Related Articles

Looking for something else?

Get QuickBooks

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