Running a business is not for the faint-hearted. As any business owner will tell you, it can be a 24/7 commitment with dozens of decisions to be made on a daily basis.

One of the greatest challenges in many businesses is cash flow. While a sizeable proportion of business cash can go on day-to-day costs and other overheads, it’s a wise move to make the most of any surplus funds while you’ve got them.

That’s where business savings accounts come into play. A high interest business savings account can put a business’s surplus capital to work to benefit the business’s bottom line. It can also be a valuable financial tool to make the most of every dollar that comes through the door.

What is a business savings account?

A business savings account is much like a personal high interest savings account, except it’s designed for business purposes rather than personal use.

Just like personal savings accounts, business savings accounts offer variable interest rates, meaning they're subject to change according to the market and bank decisions.

Different accounts will also come with different conditions attached for achieving the highest interest rate so it’s imperative to understand what these are and whether your business can achieve them so you can get the most out of the account. (More on this below.)

How business savings account interest rates work

As with a regular savings account, a business savings account is generally linked to a regular business transaction account that handles normal business incomings and outgoings.

Keeping these accounts with the same bank or financial institution can make it easier to monitor both balances and transfer funds between the two as needed.

Many business savings accounts also offer tiered interest rates. This means the more money you have in the account, the higher the interest rate and the more interest you can earn. (Some accounts will also offer lower interest rates for much larger balances, such as over $1 million.)

The benefits of a business savings account

Earns interest

Many business transaction accounts don’t earn any interest - or, if they do, it’s likely to be at a very low rate. A savings account puts the money generated by your business to work in earning extra cash without you having to put too much time and effort into it. Anything that can generate extra funds can help the bottom line, which can be especially important in a business’s early days.

Creates a reserve fund

Regularly putting surplus cash from your business into a separate account can build up a nest egg for any unforeseen business expenses or be put towards an investment in equipment or tech that can grow the business down the track.

Can make for easier accounting

Having all your business savings in one pot can help you - and your accountant - come tax time. It also helps keeps your business savings separate from your personal savings, an outcome your accountant will be particularly happy about.

May help secure business credit

Having a business savings account with regular deposits may be useful if the business applies for a loan or other credit in the future. A bank or financial institution will look favourably upon a business that’s able to demonstrate it has a record of putting cash aside on a regular basis.

Comes with a government guarantee

Along with personal savings accounts, business savings accounts are also guaranteed under the federal government’s Financial Claims Scheme. In simple terms, the government will guarantee deposits up to $250,000 in the unlikely event of the financial institution collapsing.

How to choose a business savings account

The process should be much the same as choosing a personal savings account. There are a few key considerations:

  • Fees charged. Fees can make a big dent in any interest your account is earning so ensure you select an account with no (or low) monthly account keeping fees. There are plenty on the market.

  • Interest rate. The interest rate is a major consideration for any savings account. While alluring introductory rates can catch the eye, make sure you understand what the interest rate will revert to after the honeymoon period is over and what conditions apply to achieving the highest interest rate available. Ask yourself whether your business could reasonably meet those conditions on a regular basis to achieve the highest rate. If not, look around for a competitive interest rate with fewer strings attached.

See also: Different types of savings account interest rates

  • Minimum balance requirements. Some business accounts will require tens of thousands of dollars as a minimum account balance while others will be far more flexible. Again, it’s a matter of matching your savings account to your business’s needs and circumstances. If it’s unlikely you can afford to lock a large sum of cash in a savings account each month, then keep searching for an account that better serves your business.

  • Deposit requirements. Some accounts may impose conditions on how often or how much needs to be deposited to achieve the highest possible interest rate. Make sure you consider whether these are achievable for your business.

  • Transaction limits. Some business savings accounts can come with a cap on transactions. Look for one with more flexibility, ideally unlimited transactions, if you foresee needing more ready access to your cash in your day-to-day business operations.

  • Easy access. If you operate a business where you’re on the move, chances are a savings account with a mobile banking app will suit you better. Also consider how easy it will be to transfer funds between your business’s savings and transaction accounts. Switching money between the two can be the key to get the most out of your business savings account.

How do you open a business savings account?

To open a dedicated business savings account, it should come as no surprise you need to be in business. They are not for personal use. Dedicated business accounts are another way of ensuring business finances are kept separate from personal affairs.

This is imperative for accounting and tax purposes as well as easier financial management. It also minimises the risk of personal liability and can protect personal assets if the business were to run into financial difficulty in the future.

To open a business account, you must be a sole trader, partnership, or a private company. (Only some banks and financial institutions will accept trusts so you will need to check what business structures are acceptable to the organisation you are dealing with). Under Australian laws, sole traders aren’t legally obliged to open a dedicated business account, but it can be handy if you’re a sole trader looking to keep your business finances separate.

The bank or financial institution will need your Australian Business Number (ABN) and/or Australian Company Number (ACN) as well as your registered business address. They will likely also ask for personal identity documents, residential addresses, tax residency information, and details about the business if you have had no previous dealings with the institution.

Other considerations with business savings accounts

  • Tax on interest. Just as with a personal savings account, the business will need to pay tax on any interest earned in a business savings account. It must be declared to the ATO annually.

  • Multiple access. Many business savings accounts can be set up for multiple access if there are employees or others who will need access to the account. This needs to be arranged with your bank or financial institution.

  • Integration with accounting software. In some cases, you may be able to integrate your savings account with your business’s accounting program, e.g. Xero, MYOB, or Quickbooks. As at April 2025, such data integration is offered by CommBank, NAB, ANZ, and some smaller banks so it pays to check which institutions can accommodate your business’s software if that’s important to your operations. Where integration isn’t available, transaction data will need to be manually imported.

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