Setting up a sole trader business bank account

If you’re running a solo business, managing finances is a necessary but often challenging task. It can take the focus away from what you really want to do — being creative, generating revenue, and driving growth.

Setting up a sole trader business bank account can help you to take back control by making finances simpler. In this blog, we’ll explore the benefits of opening a business bank account and look at a few of the best options for sole traders.

What is a sole trader?

As the name suggests, a sole trader is an individual who owns a business and is personally liable for its finances and debts. It’s generally considered to be the simplest business structure with fewer legal requirements¹. This makes it easier to set up and run for startups and small businesses. While there is only a single owner, a sole trader can have employees.

Examples of sole trader businesses include:

• Freelancers
• Photographers
• Electricians, plumbers, and builders
• Influencers
• Café owners and food truck operators

Does a sole trader need a business bank account?

Most sole traders are constantly juggling multiple business finances. On any given day, they can be using their bank account to:

• Pay suppliers for stock and purchase equipment and subscriptions
• Receive payments from clients
• Manage payroll responsibilities
• Cover work-related travel expenses
• Purchase business-related meals for client meetings
• Withdraw cash or transfer money to savings

A standard personal account is not built for the scale and volume of these transactions. Especially when there’s no additional business features or support available — sole traders typically manage finances on their own.

The task is made harder when these business expenses are mingled with personal outgoings such as bills and groceries.

A business bank account brings clarity by separating finances, making it easier to identify income, expenses, and tax deductions. This improves financial decision-making day to day and is a big help for filing tax returns accurately.

Benefits for a sole trader in having a separate business bank account

While a sole trader isn’t legally mandated to open a business bank account in Australia, there are a number of benefits to creating one.

1. Delineate work and private life - Keeping transactions separate provides a clearer picture of your business’s financial health so you can make smart, informed decisions. Trusting your financial footing helps you to make the right choices for business continuity and growth, while avoiding costly mistakes.
2. Track business income and expenses - You’ll always know exactly what’s coming in and going out. A business account allows you to quickly identify all streams of income and expenditure so you can plan accordingly and offset any eligible expenses.
3. Streamline tax reporting - Bookkeeping can be messy and disorganised when personal and business finances are mixed together. You might waste hours identifying and categorising your transactions. A business account keeps things clear so accounting and tax reporting are simple and accurate.
4. Make and receive overseas payments - Some business bank accounts have features for facilitating international payments. This can reduce the cost of paying freelancers or suppliers overseas and receiving income when operating in countries abroad.
5. Access advanced features - Most business accounts have features designed specifically for business banking, including invoicing tools, batch payments, and QuickBooks integration. These streamline and automate repetitive tasks, giving you more time to focus on your business.
6. Earn interest - Some sole trader business accounts allows users to earn interest on their money to support and grow cash flow.

Best business bank accounts for sole trader in Australia

Now, let’s look at some of the top sole trader business bank accounts. Most bank accounts designed for sole traders now waive monthly account fees and offer unlimited digital transactions.

Wise Business - Alternative

Suitable for: Sole traders who want a multi-currency account to save on international transactions and access advanced features

Fees: 65 AUD to get account details for 8+ currencies without recurring or monthly fees.

As an alternative to traditional banks, Wise Business is an option for sole traders who require a business account for managing moneya cross multiple currencies. Businesses with a global network of client, suppliers or even with plans for global expansion might find the Wise Business account a cost-effective solution that helps save money on currency conversions.

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With a Wise Business multi-currency account, users are able to receive, hold, and spend money in different currencies where conversions occur at the cost low and transparent fees. Since transfers through Wise Business occur at the mid-market rate, businesses don't have to spend more than they need to when transferring money across currencies, especially with no hidden markups or fees.

With Wise Business, sole traders have room to grow and scale without having to move to new accounts or tiers to access what they need.

Features:

• Account details for 8+ currencies - Bank like a local in multiple countries with unique account details for a one-time fee of 65 AUD. With Wise Business, you can invoice a customer in New Zealand in NZD and get paid into the same account. It’s easier for them and saves you money when you convert it between AUD and other currencies.
• Low cost international transfers - Send money abroad at the mid-market rate — every time. There are no hidden markups or fees.
• Accounting software integration - Sync Wise Business with your favourite accounting tools, including QuickBooks and Xero, to eliminate manual data entry errors and make reconciliations easier.
• Batch transfers - Pay invoices in bulk with batch transfers. Instead of wasting time manually sending money to each supplier or employee, you can pay up to 1,000 people with just one click using the Wise Business 'Batch Payment' feature.
• Wise Interest to earn potential returns on your AUD and USD balances **. Your money is invested in a fund of government-backed securities—without being locked away. So, you can still spend your balance as usual while it has the opportunity to grow.

Sign up for the Wise Business account! 🚀

** Wise Interest is a custody and nominee service offered through Wise Australia Investments Pty Ltd (ACN 659 961 083) (AFSL: 545411). Franklin Templeton is the issuer and manager of the Franklin Government Cash Fund. Capital at risk. Growth not guaranteed. Terms and conditions apply. Please refer to the Wise Australia Interest Legal page for Wise Australia Investment's Financial Services Guide and the fund's Product Disclosure Statement to see if this product is right for you.

CommBank Business Transaction Account

Best for - Sole traders who want to manage finances online without additional support

Fees - $0 for online banking, $10 per month for online and in-branch banking

CommBank’s² Business Transaction Account is tailored for small businesses, with its $0 monthly fee when banking mostly online. There’s also unlimited electronic transactions at no cost for digital and card payments and cash withdrawals. This account does sync with accounting software, but there’s no multi-currency features or any option to earn interest.

ANZ Business Essentials

Best for - Sole traders looking for fee-free transactions and essential banking features

Fees - $0 monthly account service

ANZ³ Business Essentials is marketed as a “simple account” that separates personal and business finances and does the basics well. There are no monthly service fees and free, unlimited electronic and ATM transactions. Again, fees apply for overseas transfers. You can visit a branch for support, but there is a $2.50 fee for assisted transactions.

Westpac Business One

Best for: Sole traders who want a low-cost account with partner perks

Fees: $0 monthly account service

Sole traders can sign up to the Westpac⁴ Business One account for free. There are no monthly fees or charges for electronic transactions, but staff-assisted transactions cost $3 and there’s no option to earn interest. Westpac advertises ‘partner offers’ with brands that allow account holders to get discounts on a range of services.

NAB Business Everyday Account

Best for: Sole traders that do business online and want discounts and free trials for services

Fees: $0 monthly account service

NAB⁵ Business Everyday is another business bank account targeting startups and small business that conduct most of their business online. There are no fees per month or for electronic transactions, but any ‘banker assisted’ deposits or withdrawals cost $3. NAB offers quite a few rewards for account holders, including discounts and free trials for accounting and payroll tools.

Simplify your finances as a sole trader with Wise Business

Time is limited as a sole trader. You want to spend less of it poring over finances and making sense of them, and more on growing your business. A separate account will create a line in the sand between personal and business finances and give you the tools to balance the books and pay taxes efficiently.

What's more, you'll benefit from the following with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, Quickbooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 65 AUD

Sign up for the Wise Business account! 🚀

Sole trader business bank account FAQs

Is it a legal requirement that a sole trader sets up a business bank account?

No, sole traders are not legally required to open a business bank account. They can use a personal bank account if that’s their preference. However, the government says it’s a “good idea” to create a business bank account to better manage finances and file taxes⁷.

What do I need to do to open a business bank account in Australia?

You’ll need to apply for an account and provide supporting documents to open a business bank account in Australia. The exact criteria vary by bank. However, most places will ask for an ABN, business name, proof of business address, and personal details of all owners, directors, and shareholders.

Sources:

1. Business Gov Au - Sole trader
2. CommBank - Business Transaction Account
3. ANZ - Business Essentials
4. Westpac - Business One
5. NAB - Business Everyday Account
6. Business Gov Au - Set up your business bank account