Is your side hustle ready for a business bank account? What you need to know
Whether it’s selling handmade jewellery online, or freelancing as a photographer outside of your 9 to 5 job, a growing number of Aussies are turning to side hustles in their spare time. After all, it’s a great way to pursue passion projects while also earning a bit of extra income to help make ends meet.
And while your side hustle may start out small as a hobby, there could come a moment when it begins to feel like something more. If you’re consistently making money, or you're getting multiple customers and clients a month, or you catch yourself thinking more and more about your venture in terms of profit and growth, then you could be ready to take your side hustle to the next level with a dedicated business bank account.
“Once you qualify for an ABN (Australian Business Number), that’s the time to start seriously considering a business bank account,” Mozo’s Banking Expert, Peter Marshall said.
So what exactly are the pros and cons of setting up a business bank account for your side hustle?
Picture this: your side hustle has finally picked up momentum, and it’s not only generating considerable income, but your expenses list, from the materials to the packaging, is also growing. However, with only a personal bank account under your belt, it’s getting a lot harder to keep track of those incomings and outgoings, because there are so many of them and they get muddled together with all of your other costs like your grocery bill and debt repayments.
That’s when having a dedicated business bank account can be super useful. It keeps your personal finances separate from your side hustle, and since it’s an account exclusively for your business transactions, it means all of the income and expenses from your side hustle can be conveniently found in one place.
Helps with taxes
Separating your personal and business finances has another advantage - it makes things heaps easier for you or your accountant when it comes to doing your taxes.
Once you start making money from your side hustle, you’ll need to report that additional income to the Australian Taxation Office (ATO). With a business bank account, you can take the hassle out of figuring out exactly how much you’ve earned or spent for tax purposes.
While you wouldn’t think twice before sending friends and family your personal bank details so they can pay you back for dinner or the cab ride home, passing those same details onto your customers, clients or suppliers may not sit so well, especially once you start developing a brand name for your side venture.
A business bank account can help out here - transactions under this account would display your business name instead of your own. This lends legitimacy to your side hustle, and tells others you want to be taken more seriously as a business.
More to juggle
If you open a business bank account, you’ll have to manage it alongside your personal account. For example, that means making sure you’re using the correct debit card, and not accidentally mixing personal expenses with business ones. Double the accounts also means double the effort to shop around for a deal with features that suit you. This could be a lot of pointless extra work if you’ve only just started your side hustle.
More potential fees - unless you’re savvy!
Some business bank accounts could also charge pesky monthly fees, so you could be forking out more money to cover those additional costs when you don’t necessarily need to yet.
How the Mozo Experts Choice Awards can help you choose
The good news is, you can avoid problems like fees and time spent shopping around by checking out the Mozo Experts Choice Award winners.
The 2020 Mozo Experts Choice Award winners for the Small Business Exceptional Everyday Account category offer no monthly fees, plus unlimited free electronic transactions so you don’t need to worry about extra costs when transferring money online from one account to another.
With winners including Goldfields Money’s Boss Access Account, Bankwest’s Business Zero Transaction Account and BOQ Specialist’s One Account for Business, all of which come with unlimited phone, online and network ATM transactions, plus a linked debit card, the Mozo Experts Choice Awards are a great place to start your search.
So make your first stop our 2020 Mozo Experts Choice Bank Accounts and Savings Awards page, which features a full list of small business account winners. Or head over to our business bank accounts comparison table to compare even more options.