Do You Need a Business Bank Account? - NerdWallet Canada (2024)

Are you starting a business and wondering if you should open a business bank account? If you operate under a registered company name, you’ll need a business bank account. However, you can choose to use your personal bank account if you run the operation in your name.

What is a business bank account?

A business bank account allows the business owner or a company representative to perform banking transactions under the business’s name. These banking transactions may include making deposits and withdrawals, using cheques, paying bills and more. Although business bank accounts offer many of the same features as personal bank accounts, they have a few perks that may be of particular use to a business owner.

Canada’s Big Six banks and credit unions offer a variety of business bank accounts designed for companies of varying sizes and financial needs. These include basic business accounts with no or low monthly fees with limited free transactions, as well as high-cost business accounts for large corporations with additional features and unlimited transactions.

Business bank account vs. personal bank account

Business bank accounts include chequing and savings account options. Additionally, business chequing accounts often feature useful extras like a higher overdraft limit or the ability to process an unlimited number of debit and credit card transactions, sometimes referred to as Moneris deposits.

Who can open a business bank account?

Most self-employed individuals, businesses and non-profit associations can open a business bank account. Similarly, farmers and agriculture-based businesses also qualify for business bank accounts, sometimes classified as agriculture accounts.

Benefits of having a business account

Whether you run a business in your name or under a brand name, you will benefit from having a business bank account, especially as your company starts to grow. Here’s why:

1. Using the same account for business income and expenses can help you get organized and make your business budgeting and planning process feel less daunting.
2. Keeping your business and personal transactions separate can make it easier to figure out personal and work-related expenses during the tax season.
3. Business banking plans often come with payroll and cash management services, saving you a significant amount of time that you can use to grow your business.
4. Business banking packages may offer a business credit card for eligible customers. If you pay off the statement balance each month, your business can gradually improve its credit, making it easier to get approved for a line of credit or a small business loan.

Types of business banking services

From the basic day-to-day banking needs to the unique financial services most financial institutions offer an array of business products at varying price points. No matter the size of your business, you’re likely to find several banking and financing options with a traditional or online bank of your choice. These business accounts and services include:

• Chequing accounts: offer a high volume of monthly transactions, unlimited Moneris transactions and other standard transactions.
• Savings accounts: enables professionals and corporations of all sizes to save for emergencies and earn interest while providing easy access to their money.
• U.S. dollar accounts: facilitate deposits and payments in U.S. dollars without charging foreign exchange fees.
• Loans: offer specialized solutions, such as term loans, overdrafts, equipment leasing and more to cover all types of operational needs.
• Lines of credit: provide businesses, commercial and agriculture units with an extra cash flow to cover unexpected expenses as needed.
• Credit cards: allow extended payable period, a secure payment network, and the ability to earn rewards for business expenses.
• Cash management tools: streamline payroll processing, monitor cash flow, and ease point of sale (POS) transactions.

Nerdy Tip: Major banks in Canada require you to provide proof of a sole proprietorship, partnership or corporation before opening a business bank account.

How to open a business bank account

While some banks let you start the process of opening a business bank account online, you may have to visit a branch to show physical copies of your business documents. The documents needed may vary based on the kind of business you operate and your province or territory.

If you cannot find the list of documents on your bank website, you can contact your bank ahead of your appointment. In addition to providing the business owner’s personal identification, these documents generally include:

For sole proprietorships:

• Business registration or license
• Trade name (if applicable)

Partnerships and limited partnerships:

• Partnership registration
• Partnership agreement, if provincial law doesn’t require a registration
• Trade name registration or master business license if operating under a registered trade name (if applicable)

Corporations:

• Articles of incorporation or of association.
• Certificate of status.
• Corporate profile report.
• Certificate of existence.
• Certificate of compliance.
• Corporate annual government filing.
• Notice of assessment for income tax.
• Business number.
• Business license.