Running your own business comes with a to-do list. Producing financial statements and monitoring cash flow are just a few of these obligations. One of the priorities (if not the highest) is to open a business bank account.
You may feel that separating your personal and business finances will cause you stress and headaches. But a business account is an important step in helping your business succeed. For example, it is part of the requirement for access to small business loans and other financing options. It also allows you to accept debit and credit card payments through a point-of-sale system.
Like starting a business, getting a business account can seem as difficult as starting a business. Don’t worry, we make it easy! In this comprehensive three-part guide, you’ll learn about the benefits, required documents and institutions offering this type of product.
The advantages of opening a business bank account
You may not know it, but the business account is an asset for you and your company. Here are some of its advantages. And if you are interested in learning more about business bank accounts, visit bank4pro.co.uk for further information.
When you interact with customers and suppliers, you want them to know that you are running a legitimate business that is not just a hobby for you. Having a single account for both your personal and business finances may make it harder for you to demonstrate your seriousness. On the other hand, by conducting your transactions from an account designed for business, you increase your credibility.
If your customers pay with cheques, you present a more professional image by asking them to make them payable to “Sacha’s Personalized Cakes” rather than “Sasha Roy”. This is even more true when dealing with suppliers; you demonstrate professionalism and can build stronger business relationships by making payments from a business account rather than a personal account.
Customer payment processing
With a corporate bank account, you can accept debit and credit cards from a point-of-sale (POS) system. Payments are faster and you are able to offer more options to your customers. Today, many consumers conduct only electronic transactions. If you don’t have a business account, they will have to pay in cash or by cheque – as long as they have it on hand, which is not always the case. Having a POS system makes the transaction process easier for customers and improves their overall shopping experience.
Separating business and personal accounts greatly facilitates annual tax returns. As a business owner, you can deduct certain expenses from your business income, but to do so, you must separate business-related expenses from those incurred for personal reasons. A business bank account allows you to quickly track business expenses and receipts and avoid inadvertently claiming a personal bill.
Access to business financing
Another important advantage is the ability to apply for business loans, cash advances, a business line of credit, or other business-related loan products. Regardless of the structure of your organization or the financial company you choose, you will need to have a business bank account for lenders to deposit funds into after approval.
There are several advantages to business loans. They can help you reorganize your debts, buy additional goods or replace your equipment. For example, a business bank account increases the likelihood that you will be able to achieve specific goals and grow your business.
Commercial credit score
Having a business account also helps establish your business credit score. You can only get that score over time by paying your bills on time. Finance companies and suppliers will often look at your credit score before determining what they can give you.
Separating your business and personal accounts will help you build your business credit history. When you pay your bills on time, using your business account, you demonstrate your ability to manage your cash flow effectively and increase your score. The higher your score, the more you improve your borrowing potential from lenders and suppliers. A good credit rating provides access to financing products at lower interest rates.
You now know the main advantages of a business bank account. Now you can open one!
What documents do you need to open a business account in Canada?
To open a business account, all business owners, regardless of their line of business, must present two pieces of valid government-issued identification (including one with a photo), such as :
- A passport;
- A driver’s licence;
- A health card;
- A birth certificate;
- Canadian Forces identification card;
- Canadian Permanent Resident Card.
- Depending on the structure of your business, you may be required to provide additional documents:
Where can you open a business bank account?
Most financial institutions allow you to hold a business account. If yours is not listed below, check their website or visit your local branch to find out what options are available to you.
Some institutions offer a wide selection of accounts with a variety of interest rates, fees and features. CIBC requires that you complete a small business account application and meet with an advisor in person.
Other institutions allow you to apply online. Once the form is submitted, a specialist will contact you to learn more about your business needs and schedule a face-to-face appointment to complete the process.