Running your own business comes with a laundry list of items that you need to tackle. Preparing financial statements and monitoring your cash flow are just a couple of those items. On or near the top of the list should be opening a business bank account.
You may think that having separate accounts for your personal and business finances will create undue stress and headaches. However, opening a business account is an important step in setting up your business for success. You’ll need a business bank account, along with other requirements, to access small business loans and other small business financing options. A business account is also required to accept debit and credit card payments from customers through a point of sale system, like Moneris, Global Payments or Payfirma.
Opening a bank account, like starting a business, may seem like a daunting task. Don’t worry, we’ve made it easy! In this comprehensive 3-part guide, you’ll quickly learn why opening a business bank account will benefit you, what documents are required, and where you can open a business bank account.
1. Benefits of opening a business bank account
You may not know it, but opening a business bank account comes with quite a few perks for you and your business. Here are the main benefits small business owners like you can experience from opening a business bank account:
When you’re interacting with customers and suppliers, you want them to know that you’re running a legitimate business and not just a hobby. If your personal and business finances are combined in one account, you’ll have a harder time proving that your business is legitimate. Having a business chequing account that is separate from your personal chequing or savings accounts can help boost your credibility in this regard.
If customers use cheques to pay for products or services you provide, they’ll need to write a cheque out to a specific person or entity. You’ll come across as more professional when customers write their cheques out to “Katie’s Custom Cakes”, as opposed to “Katie Jones.” This logic resonates even more with suppliers. If you make regular payments to suppliers, you want to appear as professional as possible in order to build strong relationships with them. With a business bank account, you’ll appear more professional, as the payments they’re receiving aren’t just coming from your personal account. This reputation boost can help you establish positive and long-lasting relationships with your suppliers.
Payment processing for customers
With a business bank account, you’ll be able to process debit and credit payments using a point of sale (POS) system like Moneris, Global Payments or Payfirma. This not only makes processing payments more streamlined, but it also provides your customers with more options. Today, many consumers rely solely on electronic transactions for their purchases. If you don’t have a business bank account, your customers will be forced to use cash or cheques, which they might not have on them. Having a POS system connected to your business bank account will help reduce customer headaches and improve their shopping experience overall.
Having separate business and personal bank accounts will make filing your taxes much easier each year. As a business owner, there are certain expenses you can write off related to your business income. These business expenses, however, should be separate from your personal expenses. Having a business bank account will help you quickly track your business expenses and receipts related to your business income. This way, you’ll be less likely to accidentally claim a personal expense as a business one.
An accidental claim could attract unwanted attention from the Canada Revenue Agency (CRA) during tax and audit season. With a separate business bank account, you’ll have a clear paper trail of your business finances. This will keep you well-organized and prepared for any audits conducted by the CRA.
Access to business financing
One of the key benefits of opening a business bank account is you’ll be able to apply for business loans, merchant cash advances, business lines of credit, or other types of business lending products. No matter how your business is structured, where you get a business loan from, or what business loan terms you agree to, having a business bank account is required. When your business funding is approved, your lender will need to deposit your funds directly into a business account.
There are many ways business loans can help your business. Business loans can help you reorganize debt, secure additional inventory, or purchase new equipment. Without a business bank account, you’ll be missing out on opportunities to achieve specific goals and grow your business.
Building business credit score
Opening a business bank account will also help you establish your business credit score. Also known as commercial credit, your business credit score is built over time by paying bills and suppliers on time. Financing companies and suppliers will look at your business credit score when assessing how much they will lend to you.
Having a business bank account that’s separate from your personal account(s) will allow you to build your business credit score. Paying bills on time through your business account will demonstrate your ability to manage cash flow effectively and will help increase your business credit score. The higher your business credit score, the higher your borrowing potential with lenders and suppliers will be. With a good business credit score, you’ll be able to apply for business lending products at lower interest rates.
Now that you understand the key benefits a business bank account provides, it’s time to open one!
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2. What documents are required to open a Canadian business bank account?
When opening a business bank account, certain documents are required from all business owners, regardless of what type of business you run. All businesses require two valid pieces of government ID (including one with a photo), such as:
- Driver’s license
- Health card
- Birth certificate
- Canadian military identification card
- Canadian permanent resident card
Requirements may vary from bank to bank. Depending on the structure of your business, additional documents may be required.
Click here to see a breakdown of required documents based on business type:
|Business Type||Required Documents|
|Sole proprietor||Your original business name registration|
|Partnership||Your original partnership registration|
|Corporation||Your original articles of incorporation or certificate of incorporation|
The most recent filing with your incorporating jurisdiction, listing your directors
Your Trade Name Registration, if applicable
Corporations that are at least a year old require one of the following documents:
3. Where can I open a business bank account?
Most financial institutions enable you to open a business bank account. If your bank is not listed below check out your bank’s website or visit your branch to find out what is available to you. All major banks in Canada offer business bank accounts, see below:
Some institutions, like CIBC, offer a handful of business accounts with different features, fees, and interest rates. CIBC requires you to complete a business account application and schedule an in-person appointment with one of their financial advisors.
Other institutions, like National Bank of Canada, allow you to fill out a business account application online. Once you complete this application, an advisor will phone you to learn more about your business needs and schedule an in-person appointment to finalize the process.
- Monthly fees
- Monthly transactions allowed
- Monthly deposits allowed (cheques and cash)
Some accounts may have higher monthly fees but offer unlimited monthly transactions. Other accounts may have lower monthly fees but offer low monthly transactions before extra fees are added on. Certain accounts may even waive your monthly fee if you meet minimum balance requirements.
With many options available in the market, we’ve broken down a few examples of business bank accounts from each institution that you may want to consider. These examples range in fees, transactions, and deposits, so you can determine the type of account that’s a good fit for you and your business.
Click here to see a comparison table of business accounts from each bank:
|Bank||Business Account||Monthly fee||Monthly transactions||Monthly deposits|
|BMO||Business Builder 1||$22.50||35 transactions||35 cheques
$2,000 in cash
|CIBC||CIBC Everyday Business Operating Account®||$20 (electronic-only)
$25 (full-access service)
|30 transactions||25 cheques
$3,000 in cash
|CIBC||CIBC Unlimited Business Operating Account®||$50||Unlimited||100 cheques
$15,000 in cash
|NBC||ePackage||$5.99||20 electronic transactions||N/A (pay per use)|
|NBC||50 Transactions Package||$39.99||50 transactions||30 cheques
$5,000 in cash
|RBC||All Inclusive Premium Operating Account Package||$100||Unlimited electronic transactions||100 cheques
$25,000 in cash
|ScotiaBank||Basic Business Account||$9.95||1 transaction for every $1,100 in account||Unlimited mobile cheque deposits|
|TD||Unlimited Business Plan||$125||Unlimited||Unlimited cheques
$25,000 in cash
BMO has six different business account offerings that range in cost and flexibility. If you rely only on electronic transactions for your business, their eBusiness Plan offers no monthly fees and unlimited electronic transactions. However, this account charges fees when cash or cheques are deposited into your account. In contrast, their Business Builder 1 account has a monthly fee of $22.50, allows for 35 monthly transactions, and lets you deposit 25 cheques and $2,500 in cash per month. If your banking needs change, you can change account plans for free.
CIBC offers a handful of different business accounts that suit a variety of needs for small and medium-sized Canadian businesses. Here is an overview of two that may be a good fit for your banking needs.
CIBC’s Everyday Business Operating Account® can provide you with both consistency and flexibility, depending on your transaction habits. You’ll have 30 transactions available each month for withdrawals, deposits, bill payments, supplier payments, and more. You’ll also save money on fees when using only electronic channels for transactions each month. This includes online, mobile, and ATM services. If your business is focused on electronic transactions, this cost-effective option may be a good fit for managing your cash flow and improving your bottom line.
CIBC’s Unlimited Business Operating Account® is a solid option if your business makes a large number of transactions each month. With this account, you’ll have unlimited transactions available for withdrawals, deposits, supplier payments, and more. You’ll also pay the same monthly fee, even if your banking activity increases month-over-month. If you’re looking to empower your business’ cash flow while maintaining steady monthly fees, this premium option may be a good fit for you and your business.
National Bank of Canada
National Bank of Canada has six different business account packages that offer a range of monthly transactions, deposits, and fees per month. Their least expensive offering, the ePackage, has a monthly fee of $5.99 and allows for 20 electronic transactions. Their premium package has a monthly fee of $77.99/month and allows for 100 debit and credit transactions per month.
One value-add that National Bank of Canada provides is that you can apply for an account online. Depending on which account you choose, you can also receive up to $900 cashback in your first year of signing up if you open an account before August 31st, 2019. More details can be found here.
RBC offers various business accounts that serve specific needs for different types of businesses. Their Low Monthly Fee Digital Operating Account is geared towards businesses who prefer banking electronically. In contrast, their All Inclusive Premium Operating Account offers unlimited electronic transactions, electronic deposits, and other features for a flat monthly fee of $100.
ScotiaBank’s selection of business accounts provides business owners with a variety of options for managing their funds. Their Basic Business Account has a monthly fee of $9.95, but this fee is waived if you have a $6,000 minimum balance in your account. Their Select Account Plans range in terms of monthly fees, transactions, and deposits. They also have a premium plan with unlimited transactions and deposits.
TD offers many business accounts that range in terms of monthly fees, deposits, and transactions. Their Every Day Business Plans range from $19 per month to $72 per month, and allow from 20 to 120 transactions per month. Their Unlimited Business Plan is their premium offering at $125 per month, but allows for unlimited monthly transactions and deposits with your account. Their plans also offer a fee rebate if you keep a specified minimum monthly balance in your account.
Open a business account, then get a business loan
Now you have a clear understanding of why opening a business bank account is beneficial for you. You also know what documents you’ll need to open an account, as well as the different account options available to you from major Canadian banks.
Once you have your business account open and operating, your next step may be to obtain a business loan. Even if you have low credit, there are many financing options available to you. Thinking Capital may be a great fit for your business financing needs. Our online application takes less than 10 minutes to complete. Once completed, one of our expert advisors will contact you within 1 hour to learn more about your business and help you get the funding you need. Once you’ve been approved, we’ll directly deposit the funds
Get the financing you need!
Thinking Capital can deposit funds straight into your business bank account.APPLY NOW