The Advantages of a Business Bank Account

If you own a business, you probably hear or know that combining your business funds with your personal funds is never wise.

Banks developed business bank accounts to keep your business funds separate from your personal money. These are specialized bank accounts for companies, organizations, and other business entities. These accounts provide businesses with a range of financial services and features tailored to their specific needs, such as:

  • Checking accounts:

    Business checking accounts are used for day-to-day transactions, such as paying bills, making purchases, and receiving payments.

  • Savings accounts:

    Business savings accounts store excess cash and earn interest.

  • Merchant services:

    Business bank accounts offer merchant services that allow businesses to accept credit card payments, set up automatic payments, and process online transactions.

  • Online banking:

    Many business bank accounts offer online banking features that allow businesses to manage their finances online, view account balances, and pay bills.

  • Loans and lines of credit:

    Business bank accounts may also provide access to loans and lines of credit, which can help businesses to finance growth and expansion.

  • Overdraft protection:

    Some business bank accounts also offer overdraft protection, which can help businesses avoid fees and penalties for insufficient funds.

Opening a business bank account is typically more involved than opening a personal account, as banks may require additional documentation, such as a business license, tax ID number, or articles of incorporation. However, the benefits of having a separate business bank account make it well worth the effort for many business owners.

The Advantages of Business Bank Accounts

Here is a list of reasons why businesses need to have a business bank account:

  • Separation of personal and business finances:

    One of the main reasons companies need a separate bank account is to keep their personal and business finances separate. This makes it easier to track business expenses, manage cash flow, and avoid confusion come tax time.

  • Professionalism:

    Having a dedicated business bank account helps establish the business as a separate entity, which can add professionalism and legitimacy. It can also help to build trust with customers, suppliers, and other stakeholders.

  • Access to financial services:

    Business bank accounts come with a range of financial services designed specifically for businesses, such as merchant services, overdraft facilities, and lines of credit. These services can help businesses to manage their finances more efficiently and effectively.

  • Payment processing:

    Business bank accounts allow businesses to accept customer payments through various methods, such as credit cards, checks, and online transfers. This makes it easier for companies to get paid and manage their cash flow.

  • Credit building:

    Consistently managing a business bank account can help businesses establish credit and build a relationship with their bank. This can be beneficial if the business needs to apply for a loan or line of credit in the future.

Overall, having a dedicated business bank account can help businesses manage their finances more effectively, establish credibility and professionalism, and access a range of financial services tailored to their specific needs.

A List of the Best Business Bank Accounts in Canada
  1. Wealthsimple Save For Business Account

    This business bank account does not have monthly or additional fees. It also does not have a minimum balance requirement. This bank account offers a reasonable 0.6% interest rate.

  2. RBC Digital Choice Business Account

    This business bank account has a monthly fee of $5. This account is recommended for small-midsize businesses that primarily operate online because, with this, you can process digital card payments online and submit cheque payments.

  3. TD Basic Business Plan

    This business bank account is perfect for side hustle businesses that already have a bank account with TD. This account archives all of your cheques for seven years, which helps in making your records organized and accessible. This account has a monthly fee of $5 and other reasonable additional fees.

  4. Scotiabank Basic Business Account

    This business bank account from Scotiabank requires plenty of small fees but with plenty of major advantages: charities receive a 50% discount on all costs, and some community groups get 35% off fees. Just register in person to qualify for this deal.

  5. Manulife Business Savings Account

    This business bank account is another recommended account to open. This account has a 2.25% interest rate. When you have this account, you can transfer the money to yourself for $1. Since this type of account has no fees, you can earn extra cash if your business has liquid funds that are not immediately needed.

  6. RemitBee’s Business Account

    RemitBee’s business account is the best among all the business accounts mentioned above. Why? Because this account offers global remittance and currency exchange services tailored to your business. With this, you can pay your employees and vendors worldwide for free! You also get limitless CAD/USD exchanges with the best rates. These are just a few of the advantages of choosing RemitBee. What are you waiting for? Sign up now.

Requirements to Open a Business Bank Account

Regardless of the type of business you operate, here are the following documents required if you are planning on opening a business bank account in Canada:

  1. Proof of identity, such as a government ID

  2. Proof of your full name and address

  3. Your social insurance number

If you want to open a business account for a sole proprietorship, you’ll also need the trade name registration certificate or master business license. You can acquire this when you register your business in your province.

Let’s say you’re opening a business bank account for a partnership; here are the documents you need to prepare:

  1. Registered declaration of partnership

  2. Trade name registration certificate or master business license (if applicable)

  3. ID for your partner

Are you planning to open a business bank account for a corporation, it is best to prepare these requirements:

  1. Articles for Incorporation/Association

  2. Name, address, and occupation of anyone who owns at least 25% of your business

  3. Trade name registration certificate or master business license (if applicable)

  4. Trade name registration certificate or master business license (if applicable)

  5. Canada Revenue Agency registration number