When opening a business transaction account, it can be a good idea to open a savings account at the same time. There are a number of reasons why you should put some money away for your business.
1. Keep an eye on spending
A transaction account tends to be used to pay suppliers and receive payments. With all those transactions coming in and out, you are getting an ever-changing picture of your business finances.
To avoid the stress of not knowing how much your business is spending each month, putting money aside into a savings account means you can keep an eye on your day-to-day spending. You can see clearly how much your business is spending each month.
Tip: Downloading your online banking app will also help you check balances and transfer money between accounts when you need to.
2. Put money away for tax payments
If you run a business, you may need to pay income tax on money your business earns. Here are some links that may help you with this:
3. Have access to cash for unexpected events
Running out of cash is one of the main reasons small businesses fail. If you get into the habit of saving regularly you could avoid this happening to your business.
With money built up in a savings account, you can see how much cash reserves you have. This is good news if you’ve an unexpected expense, or see something you want to buy that will help you manage or grow your business. With most savings accounts you can access the money quickly when you need it.
4. Make your money work for you
Interest rates on savings accounts vary. There are some types of savings accounts, like Term Deposits where you can lock money away to earn a higher rate of interest on your savings. It makes sense to shop around and compare rates.1
5. Show a good savings record to get credit
Having a history of putting money aside weekly, fortnightly or monthly can help when you need to apply for a loan, overdraft or credit card2. It shows you have the discipline to regularly save money. Although, if you build up your savings enough you may not need to borrow!
6. Planning future projects and seasonal lulls
Having access to cash can help your business through those times when money isn’t coming as regularly. Saving with this in mind allows you to plan for things like a predictable seasonal cash flow gap.
Things you should know
1. This website content is only a comparison of certain Westpac account rates. It does not take into consideration rates with other financial institutions.
2. Terms and Conditions, fees and charges and lending criteria apply.
Terms and Conditions, fees and charges apply with respect to Westpac’s transaction and savings accounts and Online Banking facility. This information does not take your personal objectives, circumstances or needs into account. Consider its appropriateness to these factors before acting on it. Read the disclosure documents for your selected product or service, including the Terms and Conditions or Product Disclosure Statement for Westpac’s for Westpac’s and for Westpac’s and for Westpac’s , before deciding.
Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714. This information does not take into account your personal circumstances and is general. It is an overview only and should not be considered a comprehensive statement on any matter or relied upon. This information including any tax information provided in this article should be used as a guide only. We recommend that you seek independent professional legal and tax advice about your specific circumstances.