EOFY for side hustles: Why your business could benefit from a separate bank account
Whether you’re running an online store, freelancing after hours or delivering Uber Eats on your bike, your side hustle could be under the tax microscope at the end of the financial year (EOFY).
If you're one of the 1.1 million or more Aussies operating as an independent contractor , keeping your business and personal finances in one account can quickly become a tangled mess – especially when it's time to declare income, claim deductions or respond to an audit.
That’s why opening a separate bank account isn’t just a smart EOFY move; it may be the simplest way to protect your business, streamline your next tax return and keep the ATO off your back.
Why those with a side hustle should separate finances
Independent contractors (freelancers) and sole traders aren’t legally required to open a business bank account, but the ATO strongly recommends it. Why? Because using a single account for both personal and business spending increases the risk of:
- Overlooking income that needs to be declared.
- Losing receipts or invoices tied to business purchases.
- Accidentally claiming personal expenses as deductions – a common red flag for audits.
If you're earning more than $18,200 from your side hustle in a financial year, that income is taxable. But even if you’re well below the threshold, it’s still good practice to track earnings and expenses properly. Having a dedicated account can make that tracking automatic.
Plus, come tax time, you won’t need to wade through months of mixed-up transactions.
What to look for in a business-friendly bank account
You don’t need to pay monthly fees or sign up for a premium business package to split your finances. Many everyday bank accounts available to sole traders and freelancers offer the basics: a separate BSB and account number, online access, and automatic transaction tracking.
Here are some key features to look for:
- No monthly account-keeping fees.
- Easy integration with accounting software like Xero, MYOB or QuickBooks.
- Instant notifications to help monitor income and track expenses on the go.
- Linked savings account to set aside tax payments or super contributions.
Digital banks often offer app-first accounts with built-in savings tools and no fees, making them ideal for those who want a clean split between personal and business funds without overheads.
For example, if you’re already banking with ING, you could set up a second Orange Everyday Account to use just for your business income and link it to a high-interest ING Savings Maximiser to store tax or business activity statements’ (BAS) contributions.
EOFY tip: Create a tax buffer with a savings account
Earning income as a contractor or sole trader means you’ll likely owe tax at the end of the financial year – especially if you haven’t been withholding anything throughout. That’s why a separate savings account for tax season is helpful. Not only will it keep that money out of your spending account, but it can also earn you interest while you wait for your tax bill. View