In the Australian e-commerce industry, the majority of business owners are self-employed professionals managing everything from their transactions all the way to supply management. As a self-employed professional, it is absolutely vital to ensure that every detail you handle in your online business is dealt with in the most efficient, effective, and accurate way possible. Out of all the different factors that must be managed, however, the type of bank account you have is one part of the equation to success that bears more importance than the rest. This begs the question:
Do you really need a business bank account if you’re self-employed?
For the majority of standalone entrepreneurs who handle their finances, this is a question that often comes into mind when the profit starts to roll in, or even as soon as they open their doors! Regardless of what industry you may be in or how elaborate your operations are, you may find yourself asking this question as your finances become important and cannot be overlooked. With your profits coming in greater amounts every collection period, you may feel the need to take your financial management efforts up a notch by upgrading your bank account. However, the truth is that the answer depends on your current situation.
Answering the question at hand
In general, self-employed professionals who function and are classified as sole traders do not need to open business bank accounts. On the other hand, if you’re a partnership or company that’s operating under the status of being self-employed, then it is definitely essential that you open a business bank account for tax purposes.
If you aren’t sure as to what status you’re registered under, you can always use your Australian Business Number and search it up online to learn more about the nature of your operations.
Knowing when you should get a second bank account
Aside from knowing the status of your business, answering the question at hand also involves knowing when you have to set one up. By the time your e-commerce business takes off and starts growing beyond expectation, and more factors need to be remembered, you’ll end up realising by then that your PayPal account won’t suffice, which is where a business bank account comes in.
E-commerce businesses, for the most part, get official accounts because they:
Need a secondary account for handling a larger influx of transactions and security purposes
Desire to make their finances and payments more organised by designating their cash flow to an account that actively keeps track of each transaction for verification
Don’t prefer to use PayPal or simply don’t know how to use it
Why you should look into opening a bank account for your e-commerce business
The main benefit of opening up a separate official account with your local bank is that it opens up more options for liquidity when handling your online business’s funds.
For instance, having a business bank account means that you’ll have the opportunity to link a separate credit card for quicker processing and convenience when carrying out your business’s own transactions. Additionally, having one will also make your business look more professional in the eyes of customers. This essentially makes it far easier for them to trust you well enough to quickly wire money for a transaction.
Outfitting your e-commerce operations with a business bank account is undeniably one of the best investments you can make for its financial system, accounting needs, and bookkeeping functions. If you need to improve your own financial tracking system right away with more security, then it’s definitely worth opening up a separate account!
Looking to give your e-commerce business the competitive advantage it needs when handling its accounting? Get in touch with our e-commerce accountants today to see how we can help you!