How to open a Business Account in Canada?
Banks in Canada are well-acclaimed for their highly balanced, secure and stable transactions. They are most distant from the credit crunch and rarely affected with the fluctuations in stock prices. Though affected, they recovered quickly from those inconstancies. It is very difficult for other banks to operate in the Canadian government. As a reason, many banks operate online only. High-interest rates are levied without touching any personal cheques prerogatives. This type of accounts is mostly unavailable to foreign companies.
Are you running a company in America? Then it is much easy to open a business bank account as they find similar procedures. This includes even crossover policies.
Are you planning business in Canada or elsewhere in the world? While setting up a business account is one of the key things you need to consider. A business account is essential for keeping a check on your personal and business transactions. It can be your income and expenses. It can have an inspection on your separate accounts.
Prior to opening a business account, let us look for the reasons why you need one
Having a business account is a symbol of projecting the credibility of your business in the marketplace. It is both from the point of view of potential creditors and customers. Having a good credit score is important when you’re launching a new endeavour. Moreover, it will have a professional look when costumers use your business tag rather than your individual name. In the era of where trust and authenticity rules, credibility has become an in-thing. If you want to build customers and wish that, they use your business name on cheques then have a bank account.
Having a unique and individual business account is significant for tax processes. One of the quickest and simplest ways to allure attention from CRA is to unite personal expenses and business bank accounts. It thus offers a clear distinction between business expenses and revenue in case of auditing by CRA.
I certain cases, companies follow the policy of “Piercing the Corporate Veil” concept and holds separation between various financial activities done by the owner and of the businesses. Maintaining a separate business account for incorporated enterprises is a must.
The cost incurred – Personal Account vs. Business Account
The business bank account is much expensive than a personal account. They typically pay less in interests. They are in fact valid reasons for having separate personal and business accounts
A business account is an asset to the owners and when the business is sold, even the bank account is also included in that.
With a business account, you can have multiple signatories. Even online business accounts support this dual signature.
Fortunately, bank charges are a deductible expense. When selecting the business account, shop for the one which best fits you. As there is a lot of variance in the charges or fees attached. It, of course, depends on the account balance, monthly transactions and more.
Estimate the transactions you incur in a monthly span of time, the lowest transaction and then compare this with the bank’s fees schedule. Go for online banking that offers at lower fees, if there is no necessary with branch banking.
A better partner is your Good bank
Apart from the fees and charges, they are many banking considerations before opting one. Such as
- The easy availability of term and periodic loans
- Business credit lines
- Mobile banking
- The ability to have an interface with the accounting software
- If the businesses are in the local proximity, develop a relationship with the local banker. through this, they are many chances of successfully obtaining small and medium business financing
Documents required for opening an account
Setting up a business account in the country like Canada is quite simple. It lacks the formal process. As all as the company meets all the basic requirements it is just submitting your paperwork. However, the documents vary according to your business type. Moreover, there are also a few common personal documents such as
- Business owner identification forms like photo ID and the governmental ID
According to the industry wise, banks require at least the listed documents
Business name registration
Authorities signed documents of identification
Articles of association or Incorporation
Existence and status certificate
Corporate profile report
Income Tax assessment papers
The business number and licence
Partnership agreement copy
Trade/business name registration
Is physical presence necessary to open an account
While some banks prefer presence others allow you to set up an account without ever visiting Canada. Though this requires a lot of restrictions and highest requirements. As it depends on the bank’s discretion, either call the bank directly or visit their branch if applicable. Many international banks operate in Canada having foreign ancillaries. With these institutions, you can set up an account in the home country where you are situated. These accounts can be transferred to Canada later. Some banks charge expensive fees as they are enduring the account internationally. Moreover, these require to maintain a high amount of minimum balance.
Banks which are best in Canada
After looking into the paperwork and other features, Now you are thinking about which bank should you open an account with right? The topmost banks include:
RBC bank(Royal bank of Canada)
Bank of Montreal (BMO)
CIBC(Canadian imperial bank of commerce)
These banks offer their service by charging a different fee structure. Once call them and proceed.
Most of the business people prefer to have a separate account for business and personal finances. Having two separate accounts aids in avoiding overspending, accurately file all your taxes and organizing your records. Another advantage of setting up an account is ideally it helps you to determine how the business is progressing annually. Tracking of expenses and income is easy and simple with this.