Ready to Open a Business Bank Account? Here’s How
If you’re thinking of opening a business bank account, we explore the benefits it offers, the options at your fingertips, and help you get started.
Updated 
9 min. read
If you’re launching a new business – congratulations! It takes a lot of hard work and courage to be an entrepreneur. If you’ve been running your business for a while, you’ve got even more reason to celebrate.
Whether a novice or experienced business owner, managing your finances is one of those details best achieved with a proactive approach. Opening a business bank account can help you feel more in control over your business, ensuring you keep track of what’s coming in and what’s going out.
How to choose the right bank account for your business
If you're starting a business, choosing the right bank account is crucial. It can seem overwhelming with so many options available, but understanding your business needs can help you narrow down your choices.
A business bank account lets a business owner perform cash flow transactions, such as accepting payments, paying suppliers, and managing employee salaries under the name of their business. It helps better manage cash flow and it keeps one’s personal and business accounts separate, which can promote more efficient business operations and financial reporting.
There are several different types of business bank accounts, including chequing, savings, and specialty accounts, each with their own benefits and considerations. Let’s break it down further and explore each option.
Types of business bank accounts
Let's take a closer look at the range of bank accounts designed for Canadian business owners. Starting with the most common type of business bank account out there—the business chequing account.
Business chequing accounts
When it comes to the basics, a business chequing account is key for handling your everyday transactions. As a business owner, you've got a ton on your plate, and this account is there to help you manage all your financial transactions, from income to expenses and employee payroll.
When selecting the right business chequing account, there are a few considerations you should keep in mind.
- Estimated number and type of transactions: Think about the number and type of transactions you expect to have each month, whether in person or electronically. The account you choose may differ depending on the where that number lands and if there are fees associated with the different types of transactions you expect to have.
- Fees and charges: Chances are your business account will have a monthly fee. If you don’t need those added features, it may not be worth it. Sometimes those fees are waived if you meet certain criteria. Always ask.
- Location of business operations: While fully digital business accounts provide the flexibility to bank from anywhere at any time, there may be occasions where you may want to interact with a financial institution that has a physical branch near you. For example, if you work primarily with cash, in-person deposits will be convenient. Moreover, if you’re looking to expand your operations into a new province or territory, it can be helpful to work with a bank with a presence in those areas.
- Overdraft protection and overdraft interest rates: How likely will you need overdraft protection? If you consider it an important investment, find out how much it will cost and don’t forget the overdraft interest rates. Do your research and find a business chequing account with reasonable rates.
- International banking and/or foreign currency access: If your business transcends geographical boundaries, you’ll want easy access to foreign currency. How difficult will it be to send, receive, and hold foreign money? Choose an account that will make your life easier, not harder.
- Access to additional features: What other features would be helpful to your business? Could you use payroll services to help you issue payments to employees? Perhaps merchant services would be appreciated, a feature that allows you to accept payments from customers in-store or online. Compare the extras available with different accounts before committing.
- Anticipated long-term growth: Your business will grow over time, hopefully to great success. But will your account grow with you? Make sure to choose a financial institution with a business chequing account that offers options to accommodate your evolving business needs.
Business saving accounts
A business savings account is a place to set aside excess cash, profits, or emergency funds, all while earning some extra money through interest on the balance.
Business savings accounts offer the added benefit of liquidity, allowing business owners to easily access their funds for upcoming plans, unexpected expenses, get through challenging periods, or to store surplus funds until they are needed.
When choosing the right business savings account, it's important to consider key factors that align with your specific business needs.
- Interest rates: For business owners who want to earn interest while generating profit, an interest-generating account is a valuable tool. Look for an account that offers higher interest rates along with other features you desire.
- Minimum balance requirements: Some banks require a minimum balance to get started, others request you maintain a daily balance. Remember to ask your bank for their requirements.
- Accessibility and withdrawal restrictions: How easy is it to deposit and withdraw cash when you need it? Will the account’s limitations be too restrictive for your business needs? Does the bank only allow e-access? These are all questions to think about before choosing a business savings account.
Specialty accounts
If your business is part of a specific industry or has unique needs, look for a specialty account designed for you in mind. Remember to shop around: you may be eligible for a discounted rate depending on the industry you serve and bank you choose.
If you're a non-profit organization or a farmer, BMO offers specialty accounts to cater to the unique needs of these groups. Take a closer look at each one to see how they may benefit your organization.
Community Account: A low-cost account offered exclusively to local non-profit organizations.
Agrilnvest Account: Created specifically for farmers, the no-monthly-fee account allows agricultural businesses to collect government matching contributions under the AgriInvest program.
How to Open a Business Account
Opening an account may be one of the easiest steps you take as a business owner. Some banks let you open a business bank account online, while others prefer you visit your bank to provide physical copies of business documents. BMO clients can easily book an appointment with a representative at their local branch who will help get them started.
Be sure to have all your required documents ready before heading to the bank. Depending on the kind of business you’re running, those documents will vary. Regardless of business type, however, you will always need to show personal identification (ID, SIN etc.) for every owner of the business along with some basic info on the business itself.
Requirements for opening a business account
Common must-haves include:
- Your company must be registered in Canada
- Make sure you’re authorized to sign for the business. Remember: you can’t open an account for a third party
- Whoever is authorized to open the account must be over the age of majority
- Don’t leave home without your government-issued personal identification. It should provide all necessary information, such as your full name, address and date of birth. Any of the following would work for these purposes:
- Driver's Licence
- Passport
- Permanent Resident Card
- Government Issued ID Card/Document
- Certificate of Canadian Citizenship
Other required documents will depend on the type of business you’re operating. For corporations, requirements are contingent upon how long your business has been operating. The following may not be exhaustive so check with your bank to ensure you have a comprehensive checklist.
| Sole Proprietor | General Partnership | Limited Partnership | Corporation |
|---|---|---|---|
Trade Name Registration Master Business License | Partnership Registration (if applicable) Partnership Agreement Trade name registration, if applicable | Limited Partnership Agreement Certificate of Limited Partnership/Declaration of Limited Partnership/Application for Registration of a Limited Partnership Trade name registration, if applicable | Articles of Incorporation Letters Patent Corporate Profile Report Annual/Statutory Return Certificate of Compliance Financial Statement or Annual Report signed by independent accounting firm Governement Assessment |
6 key benefits of a business bank account
Opening a business bank account can help set your business up for success. Not sure it’s the right move? Consider these benefits:
1. Separating personal finances from business finances
When your personal expenses become intertwined with your business expenses, confusion and inefficiencies can result – particularly when doing your taxes. Separating the two can help you better track your expenses and cash flow, saving you time and frustration during tax season.
2. Liability protection
Mixing your business assets with your personal assets opens up the possibility of being held personally liable for business debts and other obligations. Bottom line: keeping your finances separate can limit personal accountability should legal disputes arise.
3. Building business credibility
Perception is powerful. Your image, how you and your business appears to the folks you come into contact with – clients, suppliers, prospects, funders etc. – can leave a significant and lasting impression. When you use personal funds to pay for business expenses, you can come across as less committed to your venture. A designated business bank account establishes professionalism.
4. Save time and money at tax time
When you use a business bank account for your professional transactions, it’s easier for others, such as your bookkeeper and accountant, to find the information they need. For example, your accountant will spend less time identifying business transactions to create financial statements at the end of year, instead of sorting through your personal account to identify relevant transactions.
At tax time, it’s also more efficient for your accounting firm to gather the business financial information they’ll need to file your taxes. And the time saved may also save money on your bookkeeping and accounting fees.
5. Building business credit history
A small business bank account is the foundation for building your business credit so that you can apply for business credit cards, lines of credit, loans or mortgages in the business’s name, instead of in your own. Having a business bank account also helps keep your business’s interest charges and borrowing fees separate for bookkeeping and tax-filing purposes.
6. Access to other business banking and services products
When you establish a good business relationship with your bank, you gain access to other banking products and services. If your business bank account has been operating well for some time, your activity can help you get approved for a business credit card (possibly with a good interest rate too), an approval that won’t rely solely on your personal credit rating.
Bottom line
In conclusion, a business bank account is a fundamental tool for any company, offering a range of benefits such as enhanced financial organization and credibility. By familiarizing yourself with the various types available and knowing how to open one, you can ensure that your business is well-equipped for financial success.
Want to learn more about the business bank accounts available at BMO? Explore your options, to determine which account makes the most sense to your business needs.
Ready to open an account?
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