Like a personal savings account, a business savings account is simply a place where business owners can stash their money for future use and earn interest on it! You don’t have to consistently deposit large amounts, meaning your savings can gradually grow as your business does over time, and if you need them, you’ll be able to access those funds whenever you need to. That could make a savings account the perfect option for business owners who are saving up for a future renovation or company expansion, but don’t want to lock their savings into a business term deposit!
To explore some of the savings accounts available, take a look at our comparison table above, or read on for more information about the ins and outs of business savings accounts including some of the most frequently asked questions (FAQs) about them.
How do I keep on top of interest rates?
Just like personal savings accounts, business savings accounts move in line with the cash rate. That means if the RBA decides to cut official interest rates, you could see lower returns on your balance. To make sure you’re always in the know when it comes to the world of savings accounts, be sure to check in with our savings account interest rates page.
Benefits of a business savings account
While it’s not essential to open a savings account in addition to having a day to day business bank account, there are some major benefits to opting for a dedicated savings account for your business.
1. Prepare for future expenses
First of all, by regularly contributing to a business savings account you are creating a liquid asset that can be used for any financial curveballs that could be thrown your way, and let’s be real, unpredicted business costs are almost unavoidable. That could be the cost of shelling out for an essential piece of equipment that your business requires, or even saving for expansion plans in the future.
Building up a savings stash throughout the year can also provide a handy pile of cash to dip into around tax time. After all, running a business is time consuming, and having the security to pay taxes at the end of the financial year, stress-free, will be a bonus!
2. Demonstrate responsibility for future credit
Chances are that as you grow as a business, you’ll reach a point where you may need additional funding in the way of a business loan or another form of credit. And one factor that many lenders take into consideration when assessing your creditworthiness as a borrower is a demonstrated ability to save. That means a pattern of regular deposits into your business savings account could not only help you get a loan in the future, but potentially a loan with a lower rate as well!
3. Earn interest
Another major benefit of a savings account is (surprise, surprise), interest! While business savings accounts tend to have lower interest rates than their personal savings account counterparts, they can generally provide a much more rewarding place to grow savings than a business bank account, and a more flexible option than a business term deposit.
Which account is right for my business?
Is there a top or best business savings account? It’s a common question, but ultimately there are different types of accounts, with varying interest rates, that may be better for the individual goals of each business. Here’s a quick run through of the different types of rates available:
- Introductory rates: An introductory interest rate, often called a special or bonus rate, only applies for a short amount of time (usually between 3-6 months) once you’ve opened an account. These rates are often appealing high, but make sure you weigh them up against the base rate you'll receive once the introductory period is over which can be much lower.
- Ongoing bonus rates: Savings accounts often come with an ongoing bonus rate instead of an introductory rate. These rates tend to be quite competitive and while they are ongoing, they’re generally conditional on you meeting certain requirements such as a minimum monthly deposit, or zero withdrawals. If you fail to meet the requirements you’ll only receive the base rate.
- Base rates: The base interest rate on your account is the ‘no strings attached’ rate you’ll receive on your savings balance. Some accounts only offer a base rate, while the base rate on other accounts will only kick in once the introductory rate period is over or if any ongoing bonus rate conditions aren’t met.
One great place to start comparing some of the best business savings accounts in Australia is with the Mozo Experts Choice Small Business Account Awards. In 2019, Mozo’s expert judges analysed 42 different business savings accounts, with the very best named award winners in two different categories: best Small Business Kick Start Savings or best Small Business No Strings Savings.
Business savings account rates, fees and features
Now you’ve got an idea of what a great account can be used for, but when it comes to comparing options, what should you be looking for in the way business saving account features and fees?
- Interest rate: As we mentioned above, the interest rate is almost definitely going to be your number one priority in order to ensure that your money is getting a competitive rate of return. Just make sure you differentiate between the different rates on offer and any restrictions or requirements involved.
- Deposit requirements: Speaking of which, keeping an eye out for any requirements attached to your savings account could save you from ending up on a lower rate. Common requirements include a minimum monthly deposit (e.g. $1,000), a minimum number of transactions made with a linked debit card (e.g five card taps) or zero withdrawals during the month.
- Account fee: The last thing you’ll want is a monthly account fee eating into the interest you make. Luckily it’s not a trade off you have to make, as the vast majority of business savings accounts in the Mozo database don’t come with any monthly account fee.
- Minimum or maximum balances: It’s not uncommon for business savings accounts to either have a minimum or maximum balance requirement that you’ll need to adhere to in order to get the maximum interest rate possible.