Once you incorporate your business, there are newfound duties and obligations you will need to stay on top of as company director. Many of these duties involve your company’s finances, including whether it needs its own bank account. This article explore whether your company needs its own bank account, the benefits of having one and how to open a business bank account.
Opening a Company Bank Account
If you incorporate your business, it is a legal requirement to have a separate bank account for your business. In addition, companies have a range of reporting duties and obligations that make having a separate bank account necessary.
For example, companies will need to provide documents to the Australian Securities and Investments Commission (ASIC), including their annual financial reports and business activity statements (BAS). Further, businesses must keep all financial records for seven years in case of an audit, including documentation of all:
- transactions;
- invoices; and
- receipts.
Additionally, combining your personal and business banking will put you at risk of breaching your fiduciary duties. This might lead to the courts piercing the corporate veil, impacting the protections of limited liability that company directors usually enjoy.
If you are a company director, complying with directors’ duties are core to adhering to corporate governance laws.
This guide will help you understand the directors’ duties that apply to you within the Australian corporate law framework.
Benefits of a Company Bank Account
Although it is compulsory to have a company bank account, there are also several benefits to having one.
By setting up your company bank accounts well, it will make your accounting much easier. Additionally, having all of your business banking in order will make it easier to sort and identify your transactions, ensuring you do not miss out on any deductions at tax time.
Further, having your company’s banking organised will help make tracking the success of your business easier. You will be able to identify your business’ finances easier, which will help you make decisions about how to spend company money and when to cut back on expenses.
Continue reading this article below the formHow to Open a Business Bank Account
Depending on which financial institution your company chooses to bank with, different documents will be required to open your business bank account. Generally, there are a few key documents to open a business bank account.
1. Certificate of Company Registration
You will need to take your business’ registration certificate to open your bank account. This serves as evidence that you have registered your company and the exact date of registration.
2. Identity Documentation
Importantly, the person who is responsible for opening the company bank account will need to identify themselves. This is usually achieved through the 100 point system. Likewise, you might need to provide your passport, birth certificate or drivers licence.
Further, to demonstrate that you are authorised to open the company bank account, you will need to provide a letter authorising you to open the account.
3. Miscellaneous Documents
Your financial institution may request other documents to open your company bank account. This might include:
- a copy of the company constitution;
- evidence of the Directors’ appointment and identities; and
- a letter to the bank outlining your business’ banking requirements.
Key Takeaways
If you incorporate your business, it is a legal requirement that you have a separate bank account for your business. In addition to being a legal requirement, there are also some advantages to having a separate bank account. These include making accounting and taxes easier, and being able to track the financial success of your business.
If you need assistance with your company’s banking, LegalVision’s experienced business lawyers can help. You can contact them on 1300 544 755 or by filling out the form on this page.
Frequently Asked Questions
If you incorporate your business, you must have a separate bank account for your business. This is because companies have a range of reporting duties and obligations that make having a separate bank account necessary. Further, combining your personal and business banking will put you at risk of breaching your fiduciary duties, which may result in severe consequences.
Depending on which financial institution your company chooses to bank with, different documents will be required to open your business bank account. Generally, you will need to present a few key documents. This includes identity documents, your company registration certificate and your Australian Business Number. Further, you might also need to include a copy of your company constitution and evidence of the Directors’ appointment.
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