When you start a business, one of your first tasks should be to open a business bank account. It’s important to keep your business depositing and spending separate from your personal banking and it’s not enough to simply keep separate records. Business owners may opt for different banks for their business and personal accounts or choose one bank that offers competitive accounts for both. Below are some reasons to keep your business funds separate from your personal cash.
Keep Your Personal and Business Transactions Separate
If your company is incorporated, then you should handle all of its financial transactions through your business, especially those related to taxes.
This is the key reason for opening a small business bank account, separate from your personal accounts. A business account also allows signing authority from someone other than you, if required, while a personal account does not. And it avoids the commingling (mixing up) of personal and business transactions, something the Canada Revenue Agency frowns upon.
Start Building a Credit Profile for Your Business
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.
Present Your Business More Professionally to Clients, Peers and Suppliers
A business bank account lets others, such as your clients, competitors and suppliers, know you’re serious about your business. Opening a small business account means you can accept and deposit cheques payable to your business name, instead of asking clients to write a cheque to you personally. And it establishes a professional image with your suppliers, which may favourably impact the terms of your accounts with them.
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 the 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.
We’ve simplified the process of opening a business bank account by starting with our related searches so you can build your small business’s reputation, credit and help keep your business transactions and tax documents organized.