Do I need a business bank account?

Small-to-medium enterprises (SMEs) are the lifeblood of our economy and make up 99% of registered companies in Singapore.¹ As an SME business owner or sole proprietor, you might be wondering if you can use your personal bank account instead of opening a business bank account. 

The short answer is no - you need a corporate bank account to keep your business’s transactions separate from your personal expenses. A separate account gives you a clear view of your company’s cash flow, which is essential for filing corporate tax returns and monitoring your firm’s financial health. 

In this article, we’ll explore the benefits of opening a business bank account and how to choose one. We’ll also highlight why Airwallex’s all-in-one Business Account might be a better fit, especially if your business operates globally or has international payment needs, such as paying suppliers in China.

Five benefits of using a business bank account in Singapore

Opening a business bank account might seem time-consuming at first, but it’s essential to your company’s financial health. Imagine how much time it would take to sort out personal expenses from business’s transactions, when you could be focusing on serving your customers instead.

Here are some other benefits of using a business account:

1. Track your tax obligations 

Organised bookkeeping makes a big difference at tax time by making it easier for you and your accountant to collect financial information. Airwallex’s business account can be linked to Xero, Quickbooks and Netsuite to further automate this process. Consult your accountant for more details on potential tax implications.     

2. Track performance

Keeping an eye on cash flow is vital for any business. A business bank account makes it easier to track, monitor, and manage your income and expenses. With regular reviews, you can make quick adjustments to your business that help keep you on track with your targets. 

A business account also provides a dedicated space for all your business transactions and keeps them separate from your personal expenses. This simplifies your bookkeeping and makes tax preparation more straightforward, as you'll have clear records of business-related expenditures.

3. Access to financial services for your business 

Business accounts come with tools and services that can support your enterprise’s growth. If you’re just getting started, you can open a business account first then use these financial services as the need arises:

• Multi-currency accounts. Singapore is tightly integrated with the global economy, and you will eventually need to transact in foreign currencies. Multi-currency accounts let you accept, hold, and send foreign currencies without unnecessary conversion fees.

• Corporate cards. Empower your employees to handle business travel bookings, marketing spend, and other expenses with a corporate virtual or physical card. You can even enjoy savings with cards like the Airwallex Borderless Card, which offers 1% unlimited cashback on all spend.

• Accepting online payments. When you make it easy for customers to pay, they’re more likely to complete their purchase or settle their invoice. Airwallex lets you generate Payment Links that you can embed on your invoice, and a payment gateway for accepting eCommerce payments. Enjoy these payment services when you sign up for a free Airwallex Business Account.

4. Simplified payroll and bill payments

Many business accounts offer payroll services that simplify employee payments. These services ensure that salaries are paid on time and that CPF contributions are handled accurately. Airwallex’s business account also has a Bill Pay feature that automates payments to vendors around the world.

5. Access to business loans

Having a dedicated business account can make it easier to apply for business loans or lines of credit. If you already have a banking relationship with them, the bank can quickly assess your creditworthiness and speed up the loan approval process.

How to choose the right business bank account in Singapore

With options from banks in Singapore, neobanks, and fintech providers, finding the right one for your business can feel overwhelming. Ask yourself these questions to narrow down your options: 

What are your specific needs? 

Start your search by thinking about your business’s short-term needs and long-term goals. Ideally, your bank account will accommodate your business as it grows and evolves. Here are some key things to consider:

• Transaction type and volume - If your business deals with cash, you may need a bank with nearby branches to make deposits. If you operate mostly online, mobile apps and a reliable online banking system might be more important. 

• Global payments - Trading across borders requires additional services to help you manage international transfers, foreign exchange rates, and payment workflows.  

• Company cards and expense management. A business account with debit or credit cards for different employees simplifies expense management and reduces the need for reimbursements.You also get detailed transaction records and better control of business-related spending.

• Access to loans. If you need frequent injections of working capital, choose a financial institution that offers loans to business account holders. Having a business account with the same bank builds a relationship and trust, which increases your chances of loan approval.

• Customer support - Customer support from your bank can impact the service you provide to your customers. Having access to 24/7, responsive service can help you quickly address any issues and minimise the customer impact. 

Identify the types of transactions and services you need and use this as your key criteria when comparing business bank accounts.

What fees are involved? 

Different business bank accounts charge various fees for their services. For example, the DBS Business Account charges a monthly service charge if average daily account balances fall below SGD 10,000.² OCBC Business Banking also has a monthly service charge, as well as early account closure fees and overdraft charges.³ It's important to consider these fees carefully and choose an account that aligns with your business needs to avoid unnecessary costs. Fintech firms like Airwallex offer zero fees. 

Banks also charge foreign transaction fees when you make wire transfers or SWIFT payments.

How easy is it to use?

While fees and features are important, service and convenience are also important, as they can impact both your bottom line and the customer experience. Things to look out for include:

• Customer service via a channel and times that suit you

• Mobile app navigation and features

• Software integration capability

• Speed of international transfers

• Access to reporting

• Ability to support multiple users or entities

• Capacity to hold multiple currencies

Bonus Tip: Talk to other business owners and read reviews online. Seeing what others like you think and learning about their experiences can help you make an informed decision.

What are the alternatives to a traditional business bank account?

The growth of non-bank financial services providers such as challenger banks and fintechs has opened up new possibilities for businesses beyond traditional bank accounts. As smaller, agile companies, they’re been able to produce innovative products and services that suit the needs of business operating in an increasingly online and global environment. 

Digital business bank accounts

Singapore is home to financial institutions that have the Digital Wholesale Bank License from the Monetary Authority of Singapore (MAS). These digital business banks serve businesses only and operate entirely online.⁴ Their core feature is a business account that lets you send and receive payments. They can also offer business loans and revolving financing. 

Digital banks have a banking licence and operate entirely online without physical branches, while traditional banks have physical locations. Fintech firms have a Major Payment Institution Licence from the MAS and focus on innovative financial solutions, often targeting specific areas like payments. Examples of digital banks in Singapore include Trust Bank, GXS Bank, and ANEXT Bank. 

End-to-end business accounts 

Fintech payment specialists such as Airwallex offer an all-in-one Business Account that helps businesses operate overseas. Although they are not a bank, these firms are licensed by the MAS as Major Payment Institutions. This means they can offer multiple financial services like international transfers, currency exchange, multi-currency accounts, and corporate cards.

Benefits of using Airwallex Business Accounts

If your business needs an efficient, cost-effective alternative to traditional banks, look no further than the Airwallex Business Account. This all-in-one account has everything you need to run your company in Singapore and beyond: 

• 23+ multi-currency accounts. Open multi-currency Global Accounts in minutes and accept 23+ currencies from over 60 countries.

• International payments to 150 countries. 90% of Airwallex’s international transfers go through local payment rails instead of SWIFT. This means low transaction fees and faster transfer times, with 85% of funds arriving the same day.

• Market-leading exchange rates. Trade 60+ currencies at interbank rates, and save up to 80% on foreign exchange fees.

• Unlimited corporate cards. Issue virtual and physical Borderless Cards with 1% unlimited cashback. These multi-currency debit cards are powered by VISA and let you make purchases from held currencies in your Airwallex account.

• Expense management. Our built-in expense management tool gives you full control and visibility over company card spend.

• Payment gateway. Accept multi-currency payments from customers in 180+ countries with our payment gateway. Process payments from major credit card networks and 160+ local payment methods.

Here are some great reasons to use fintech firms like Airwallex instead of a traditional bank:

• No account opening fees or admin fees. Corporate bank accounts often come with account opening fees, fall-below charges, or monthly fees. In contrast, an Airwallex Business Account is free to open and has no minimum balance. There are no admin fees either - you only pay for the services you use.

• Centralised systems for all operations - Fintech firms offer one platform that let you manage all your financial operations in one place. This centralisation simplifies managing payments, expenses, and other financial activities, reducing the complexity and time spent on administrative tasks.

• Flexibility to support growth - Fintech business accounts include flexible, scalable features designed to adapt to your business’s changing needs. Services like multi-currency accounts help small businesses expand overseas, while embedded finance generates additional revenue streams for large enterprises. 

• Tech-first systems - Airwallex leverages advanced technology to create a user-friendly and efficient platform. This technology-driven approach supports seamless integration with other tools and creates a smooth, intuitive experience for managing your finances.

• Constantly evolving features - At Airwallex, we continually update features to align with the business needs of our customers. This means you’ll have access to the latest tools and services, helping you stay competitive and efficient.

Meet the Singapore baby food company that switched from 3 financial providers and streamlined operations with Airwallex

Little Blossom is a Singapore baby food brand that makes organic snacks and cereals.  After launching business in 2019, the Little Blossom team tried various banks and fintech providers to support their expansion to Asia.

They used different platforms for corporate cards, receiving customer payments, and sending international payments to suppliers. However, using these providers would mean manual bookkeeping and a fragmented view of their financial transactions, which can lead to human error. 

"Before Airwallex, we juggled between multiple providers for our corporate cards, and payments,” says co-founder Kwek Ji Yun. “It quickly became clear that we needed a better financial solution.” 

"With Airwallex, we can instantly issue employee cards and categorise international expenses for things like business travel or social media marketing,” says co-founder Gillian Choo. “It's now easier than ever to manage our finances."

Expanding overseas means increased operational complexity, from managing multiple currencies to getting a full view of each market’s performance. With Airwallex, Little Blossom found a fintech partner that could keep pace with their needs. 

Making the right choice

All Singapore businesses need a separate business account to have a clear view of your business’s revenue, expenses, and cash flow. This also makes it easier to submit your corporate income taxes.

Choosing the right business account is an important decision for your new enterprise. It can help you save money, improve customer experience, and simplify financial operations. Take your time to consider your needs, compare options, and make an informed decision. The right choice will support your business growth and make managing your finances easier.

Singapore businesses like KeepCup, EU Holidays and Igloohome are thriving with Airwallex today. Open a free account and let Airwallex handle your payments, so you can focus on growing your business. 

Related articles about business banking:

• Compare the Best Business Bank Accounts for Singapore Businesses

• How to Open a Business Bank Account

• Payment Methods Guide for Singapore

FAQs about Business Accounts

1. I’m a sole proprietor. Do I need a business account?

You’re not legally required to have a business bank account if you’re operating as a sole proprietor. However, separating your business and personal finances can help with better financial management and simplified tax reporting, while providing a solid foundation to support future business growth. 

2. How much money should I put in my business account?

This depends on the nature of your business and the account’s minimum balance requirements. Ideally, you would have enough cash to cover short-term expenses and any unexpected costs. To free up your cash, consider using an account with no minimum balance or fall-below fees, like Airwallex’s all-in-one Business Account. 

3. Will I get taxed more if I use a business account?

The type of bank account you use has no direct influence on how much tax you pay. However, clear financial records can help you and/your accountant better manage your tax obligations. 

Sources

1. https://www.singstat.gov.sg/modules/infographics/economy#enterprise

2. https://www.dbs.com.sg/corporate/cash-management/new-business-account-pricing

3. https://www.ocbc.com/business-banking/help-and-support/accounts-and-services/business-pricing-guide

4. https://www.mas.gov.sg/regulation/banking/digital-bank-licence

This publication does not constitute legal, tax, or professional advice from Airwallex nor substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. If you would like to request an update, feel free to contact us at [[email protected]]. Airwallex (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.