Running a business can be stressful, and that’s before you even begin to consider the financial side of things. After all, there are employees to manage, operations to handle, decisions to be made and, of course, finances to keep track of. If you’re still mixing your personal finances with your business finances, you probably know how confusing and scattered everything can be. This is precisely the reason why successful businesses always have their own bank account. With a business bank account, the business finances are contained and everything remains organized. To learn more about business bank accounts, why they’re beneficial, and how to choose and sign up for an account, continue reading below.
Are you using your personal credit card to make business-related purchases?
Using a business bank account is mandatory in some circumstances and can be quite useful even when it isn’t mandatory. If your business is a separate legal entity, such as a corporation, you are required to open a business bank account that is individuated from your personal finances by law (learn how to incorporate your business). Let’s explore the other benefits of opening a business bank account.
Having a separate business bank account will keep income and expenses separate from your personal finances. When the time comes to filing your business taxes, determining business income and expenses will become much easier. Taxes are already enough of a burden, make it as easy as possible for yourself
A big part of operating a business is making decisions on financial information. If your personal finances are mixed into the business financial data, you won’t have the most accurate information available. Managing a business will be more simplistic with correct information produced from a business bank account.
Your personal finances will be protected when they’re separated from the business’ assets. Furthermore, business banks often offer limited personal liability protection which helps protect your personal assets.
Small business vocabulary all business owners need to know.
Businesses that have their own bank account appear to be more legitimate in the eyes of others in the world of business. Lenders, vendors, customers, and employees will consider you to be more credible and professional.
Having a business bank account will help you build and establish your business credit score. Business credit health is important because vendors and lenders will assess it before proceeding to work with you.
When you have a business bank account, finding and securing financing becomes much easier. The reason behind this fact is lenders tend to require their borrowers to have a business bank account if they’re applying for a business loan. Depositing loaned funds for a business into a personal account can be a big red flag for lenders
Will your personal credit affect your business loan application?
If you’ve decided that a business bank account is right for you and your business, the next step is to find an account that works best for your needs. Of course, you don’t need to commit to just one, you might need multiple business bank accounts for various uses. There are three main types of business bank accounts, as listed below.
Thinking about applying for a business loan? Avoid these application mistakes.
In addition to business bank account types, you’ll also need to select a bank to work with. Each bank has its own requirements, restrictions, and regulations. The characteristics of the bank usually work in your favour or against your favour, it’s merely a matter of finding an account that suits your needs. Below are various factors to consider when researching business bank accounts.
Most business accounts will have some sort of fee attached to them. Below are the various fees to watch out for when looking for business bank accounts.
Interest rates are mostly applicable on savings accounts, but could potentially be offered on chequing accounts too. Naturally, the higher the interest rate is, the more you’ll earn on your idle money.
Learn how to deal with small business debt.
Most businesses do their daily banking online, finding a bank with an optimal and high functioning online presence is ideal. In addition, a bank that is close to your business and has conveniently located ATMs is favourable too.
Integration refers to two aspects: existing relationships with banks and accounting integration. If you open a business account with a bank you’re already familiar with, the transition will likely go a lot smoother. As for accounting, opting for a bank that can easily work with your accounting software and systems will help the transitionary period.
How to expand your business with new capital, learn more here.
| Monthly Fee | Minimum Balance Required to Waive Monthly Fee | Monthly Deposits | Monthly Transaction Limits | |
| TD Unlimited Business Plan | $125 | $65,000/monthly minimum balance | Unlimited deposits$25,000 in cash | Unlimited |
| BMO Business Builder 1 | $22.50 | – | 25 deposits$2,500 in cash | 35 |
| CIBC Unlimited Business Operating Account | $65 | $45,000/daily minimum balance | 100 cheque $15,000 in cash$1,000 in coin | Unlimited |
| Scotiabank Basic Business Account | 10.95 | $8,000/monthly minimum balance | – | 1 free transaction for every $1,500 in the account |
| RBC All Inclusive Account | $100 | $75,000/daily minimum balance | 100 paper $25,000 cash | Unlimited electronic transactions |
| NBC 35 Transactions Business Account Package | $26.99 | – | 20 cheques$3,000 in cash$500 in coin | 35 |
TD has a range of business bank accounts that range from $5 to $125 a month. Depending on which plan you choose you can have as little as 5 deposits and transactions to an unlimited number of deposits and transactions per month. With the TD Unlimited Business Plan, you get unlimited transactions and deposits for a monthly fee of $125. On the upside, you can have your fees waived if you have a monthly balance of $65,000 or more.
The BMO Business Builder 1 has an affordable monthly fee of $22.50 for 35 monthly transactions, 25 cheque deposits and $2,500 in cash per month. This is a great option for smaller businesses who are growing, as you are able to change your account plan for free when your banking needs change.
The CIBC Unlimited Business Operating Account is a great option for businesses that make a lot of transactions. If you expect your transactions to increase this account is perfect as it provides unlimited transactions, deposits, and withdrawals for a steady fee of $65. While this fee is quite hefty in comparison to the other options, it does come with very fews limits. Moreover, if you have a minimum daily balance of $45,000, your fee will be waived.
Scotiabank Basic Business Account is one of the cheapest options available. It costs $10.95 a month and comes with 1 free transaction for every $1,500 in the account. If you keep a monthly balance of $8,000 a month, you can have your monthly fees waived. If you need more transactions or deposits, Scotiabank has a variety of business bank accounts that you can choose from.
The RBC All Inclusive account is a comprehensive solution to your banking needs. It includes unlimited electronic transactions for a flat fee of $100. If you have a minimum daily balance of $75,000, you can have your fee waived. Moreover, with the RBC All Inclusive account you’ll be able to deposit 100 cheques and $25,000 in cash.
The NBC 35 Transaction Business Account Package includes a monthly limit of 35 transactions for $26.99 per month. With this account, you’ll also be able to deposit $3,000 in cash, 20 cheques and $500 in coins. Overall, it’s a great account to start with, however, if these don’t meet your needs exactly, National Bank of Canada has a total of six different business accounts that you can choose from. The accounts vary in the number of transactions, deposits, and withdrawals offered. The cheapest option they have is only $5.99 and the most expensive is $77.99.
Are you ready to open a business bank account? There’s one final step: preparing the documentation needed to open an account. The paperwork you need will depend on the type of business you have. The documents you need are listed below.
All in all, businesses that have their own bank account tend to be more organized, professional and legitimate. Registering for a business bank account is rather simple and quick, the longest part of the process will be selecting the bank and account you want. Open a business account today – your business will thank you.
Rating of 5/5 based on 2 votes.
Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
Earn an average 5%¹ cash back at thousands of partners and at least 0.5%² cashback guaranteed.
Build credit while spending money with the Refresh Financial VISA card.
With KOHO’s prepaid card you can build a better credit score for just $10/month.
All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.
Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.
