How to Pick a Business Bank Account

“It’ll simplify bookkeeping and bookkeeping, and if you’re audited, it’s easier to do an audit when the business account is separate from your personal account,” says Tehrchian, who specializes in helping business owners and the self-employed.

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A commercial bank adds credibility to your business because “customers and suppliers feel more comfortable sending money to an account with your company name than to a personal account,” she adds.

If you need to give your employees access to your work account, you can also allow them to write checks or use debit cards. “They can limit the amounts they can spend per transaction,” says Tehrranchian.

Establishing a separate commercial bank account makes it easier to generate credit for the business. “This means you may be eligible for a reduced interest rate on loans or other types of financing that your business may need,” she says.

Choose the features and extras that work for you

As with a personal checking account, a small business owner can manage and organize their money in a business account to make business purchases and pay bills, suppliers, or employees.

However, different banks offer different deals when it comes to commercial bank accounts. “Some banks offer special features and perks to businesses that open business accounts, such as: For example, automatic bill payments, discounts when generating payslips, or access to a personal loan officer who specializes in business loans,” says Tehrranchian.

While fees for a business account are typically higher than for a personal account, some banks offer stripped-down business accounts with low fees for those who have a very small number of transactions each month.

Limiting the number of transactions allowed each month could apply to both deposits and payments. “This can be a significant problem for some businesses, so it’s important to look for a bank and account that can provide you with what you need in terms of transactions, as you may have to pay additional fees for excess transactions,” warns her .

Go digital

Not all business accounts allow you to get things done online. Some banks are still very check-oriented when it comes to business accounts. Make sure your bank keeps up with the digital age.

“Companies with an online model typically need to do all of their banking online as well,” Tehrachian asserts, emphasizing that it’s important to shop around and find banks that can cater to your specific online needs.

Businesses need to pay bills and suppliers, and businesses of a certain size may have employees who need to be paid on a regular basis. Most traditional commercial bank accounts don’t allow online bill payment, Tehrranchian warns, but adds, “Some banks are now offering commercial bank accounts that allow business owners to pay their employees and suppliers across Canada using Interac E-Transfer.”

Check foreign currency transactions

Depending on the nature of the business, an entrepreneur may also need the ability to trade in multiple currencies.

“Currency management is very important when your company deals with international suppliers or customers,” affirms Tehrchian. “You’ll probably want to set up a commercial bank account in USD or Euros or British Pounds, depending on which jurisdictions you’re dealing with.”

This makes it easier to receive funds and pay suppliers in those currencies and allows you to control the timing of converting foreign currency to Canadian dollars, she adds.

Think ahead because as businesses grow over time, so do their banking needs. “As long as the various features you may need as your business grows don’t cost you a fortune in fees right now, it’s better to open a commercial bank account that will meet your future needs as your business grows,” says Teherchian.

Consider defending against overdrafts

Overdraft protection is another handy feature to consider when purchasing a commercial bank account. This feature saves time and protects your credibility and business opportunity in the event your account balance falls short and you need to exceed your limit.

Ultimately, choosing the best business checking account depends on the needs of each business and the growth trajectory of the business. “Different banks have different target markets when it comes to business accounts. So it’s important that you do your homework and find the bank that’s the best fit for you in terms of fees, features and the flexibility to adapt to your growing business needs,” says Teherchian.