Find the right match with the needs of your business, and make the most of your new partnership with a financial institution.
Setting up a business is a stressful and complex undertaking. An entrepreneur has to juggle so many things that it’s easy to neglect some important planning considerations. One of them is setting up an exclusive account for business-related financial transactions.
Keeping the books of your business from your personal affairs is always a good idea, says Tina Tehranchian, a certified financial planner and senior wealth advisor at Assante Capital Management Ltd.
“It will make accounting and bookkeeping easier and in case you get audited, it will be simpler to go through an audit if the business account is separate from your personal account, says Tehranchian whospecializes in assisting business owners and self-employed professionals. Keeps it Business
Having a business bank boosts the credibility of your business since “customers and suppliers will feel more comfortable sending money to an account with your business name on it than to a personal account,” she adds.
In addition, if you need to give your employees access to your business account, you can allow them to write cheques or use debit cards. “You can put caps on the amounts they can spend per transaction,” says Tehranchian.
Setting up a separate business bank account makes it easier to generate a credit score for the business. “This means that you may be able to qualify for a reduced interest rate on loans or on other types of financing your business may need,” she says. Choose the Features and Frills That Work for You
As in a personal checking account, a small business owner can manage and organize their money in a business account to make business-related purchases, and pay bills, suppliers or staff.
However, different banks offer different deals when it comes to business bank accounts. “Some banks deliver special features and perks to businesses that open business accounts, such as automatic bill payments, discounts on payroll generation, or access to a personal loan officer who specializes in business loans,” says Tehranchian.
While the fees for a business bank account are usually higher than a personal account, some banks offer slimmed-down business accounts with small fees for those who have a very small number of transactions each month.
The limit on the number of transactions permitted each month could be placed both on deposits and payments. “This can be a significant problem for some businesses, so it is important to shop around to find a bank and an account that give you what you need in terms of transactions as you may have to pay additional fees on excess transactions,” she cautions. Go Digital
Not all business accounts allow things to be done online. Some banks are still very cheque-oriented when it comes to business accounts. Make sure your bank is in step with the digital age.
“Businesses with an online model usually need all their banking transactions to be online too,” contends Tehranchian, stressing that it is important to shop around and find banks that can cater to your specific online needs.
Businesses need to pay bills and suppliers and those of a certain size may have staff that needs to be paid regularly. Most traditional business bank accounts do not allow online bill payment, warns Tehranchian, but adds, however, “some banks now offer business bank accounts that allow business owners to pay their employees and suppliers across Canada with Interac e-transfer.” Check on the Foreign Currency Transactions
Depending on the type of business, an entrepreneur may also need the ability to deal in multiple currencies.
“If your business deals with international suppliers or customers, currency management is very important,” asserts Tehranchian. “You would probably want to set up a business bank account in USD or Euros or British Pounds depending on the jurisdictions that you deal with.”
This facilitates receiving funds and paying suppliers in those currencies and allows you to control the timing of converting foreign currencies to Canadian dollars, she adds.
Think ahead because as businesses grow over time, so do their banking needs. “As long as the different features that you may need as your business grows are not going to cost you a fortune in fees right now, it is better to open up a business bank account that will meet your future needs as your business grows,” Tehranchian says. Consider Defending Against Overdrafts
Overdraft protection is another handy feature to consider when shopping for a business bank account. This feature saves time and safeguards your credibility and business […]
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