How to open a business current account in Canada?

For the majority of businesses, the process of application for the current account is lying on the responsible manager. And no matter how much you trust your manager, there remains the risk that he will not be able to choose the most favourable settlement product for your company, from a set of offers of Canadian Banks and credit unions. Bankchart.ca will teach you how to compare business accounts and to select the best one.

Summary

  1. Step 1. What is a business current account? What are the kinds of such accounts in Canada?
  2. Step 2. How to compare commercial day-to-day accounts? 
  3. Step 3. How to get the maximum from a current commercial account?
  4. Step 4. How to apply for a commercial current account in Canada (online)?
  5. Findings

It's hard to imagine doing business without a current account in a bank, whether it is a sole proprietorship, partnership, corporation, or unincorporated association. Without it, you simply will not be able to pay bills and receive payment for your goods and services, to pay taxes. For the majority of businesses, the process of application for the current account is lying on the responsible manager. And no matter how much you trust your manager, there remains the risk that he will not be able to choose the most favourable settlement product for your company, from a set of offers of Canadian Banks and credit unions (TD Bank, Scotiabank, BMO, CIBC, HSBC and others). Bankchart.ca will teach you how to compare business accounts and to select the best one.

Step 1. What is a business current account? What are the kinds of such accounts in Canada?

 A current business account in Canada can be opened by banks or credit unions for firms and entrepreneurs for-profit and non-profit activities. It enables them to pay for invoices from suppliers, to get payments for commodities and services from their customers, to pay salary and duties and to purchase assets. Current accounts with Internet banking function also help you to manage your cash flow, to calculate taxes and to keep accounting records.

In Canada, current business accounts can be opened by both nationals and non-residents. If you are a freelancer and perform some services out of duty, the presence of a personal account will be enough. But, if you are registered as a co-operative, partnership, sole proprietorship or corporation - you must open a current business account.

Before choosing the bank and the current account, you should first estimate the amount and the type of future operations (electronic transfers, checking, ATMs withdrawals, international transactions, paying salary) to select the product, which will suit you most.

Canadian banks and credit unions usually propose several tariff plans with different amounts of free operations. The more is the quantity and the types of free operations a tariff plan proposes – the higher is its servicing commission.

Also, financial organizations in Canada usually offer such business current accounts:

1. Standard business current account - is developed for day-to-day transactions and don’t have free operations
2. The unlimited tariff plan has an endless amount of free operations
3. Non-for-profit account - is offered for community groups and non-profit organizations
4. US dollar account – is proposed for firms with business activities in the USA
5. Agriculture account – is designed for farms and takes into account the specifics of their activities

Opening a business account has such edges: 

  • Helps to control and to analyze the firm’s cash flows
  • Multi-clients access to the account control may be established
  • Useful Internet banking for conducting transactions and to export monthly statements
  • Automatic calculation of certain taxes, for example, when paying salaries
  • Bigger transactions limits versus to personal accounts
  • Credit lines or overdrafts can be established on the current account
  • Granting you with additional softs like book-keeping and antivirus programs
  • Extra bonuses from financial organizations, for example, financial surveys and investment pieces of advice from the bank's managers, useful webinars on business topics, free credit cards for the company's staff and others

But, after opening the business current account you will carry extra costs, which according to our investigation will vary from 0 to 125 CAD monthly and higher

Step 2. How to compare commercial day-to-day accounts? 

Applying for a business account, a responsible manager should consider the following tariffs to plan the firm's account expenses in the future and to choose the most optimal proposal and the financial company:

  1. The servicing periodic fee – by our investigation the tariff value vary from 0 to 125 CAD monthly. The more transactions and bonuses are included in a business plan – the greater will be the servicing commission. The fee can be cancelled if the firm deposits a particular amount monthly or hold a certain balance on the account (for example, 100 000 CAD)
  2. Online transfers – often cost from 0 to 1,25 CAD per transaction depending on the tariff plan and whether the transfer is made among the financial organization or to other ones. The commission can be included in the servicing fee
  3. Cashing of checks – can cost the company expensive if it often withdraws money. The commission value ranges from 0,25 to 3,5 CAD per transaction according to our investigation. The fee can be included in the tariff plan servicing commission
  4. Withdrawals at ATMs and tills– can be free, especially if the staff withdrawals money at the bank’s ATMs. But if the operation takes place in the ATMs of other financial organization a fee will be charged in the size of 0,25-1,5 CAD
  5. The cost of crediting money - some financial institutions set a fee for crediting funds to the current account
  6. International operations – such a fee is essential to firms with foreign affairs. The tariff can be set in the form of the interest of the transaction or a sum of CAD
  7. The number of free transactions – high-priced business plans can propose an unrestricted limit of free operations while inexpensive offers may include only five chargeless operations monthly. Besides, it is important to find out what types of transactions do such a limit include and whether it functions permanently or only for advertising time
  8. The size of percentage rates – usually Canadian financial organizations pay zero interest rates on a current business account. But there can be exclusion, for example, for accounts for farmers
  9. The minimal balance – is rarely established by Canadian financial organizations, but it can be set for business accounts with higher interest rates

So, you should make an investigation of the tariffs first before opening a business account. Such data can be found on the sites of Canadian financial institutions, or you can take a copy of a business plan agreement at a branch.

Step 3. How to get the maximum from a current commercial account?

To receive the maximum out of the transactional servicing in a financial institution in Canada, the responsible manager should also consider the next product features: 

  1. The credit option – does the account provides the ability to connect overdraft or credit line
  2. A savings account – does the bank offer savings account for business with higher rates and the possibility to transfer and withdraw money to the current account without penalties
  3. The number and the location of branches and ATMs – does the bank or the credit union possess enough points of sales. Are some of them near your firm's address and domicile of the personnel?
  4. The Internet banking program – is the software comfortable for your book-keepers? Does it support all the needed options, like integration with the accounting software? How many working places does it support?
  5. Salary and corporate credit cards – does the financial institution offer such services? What tariffs will be charged?
  6. Free bonuses – does the credit union or the bank offer additional perks, for example, economic and industries researches, webinars on business topics, cash back on the salary cards and discounts from partners 

Step 4. How to apply for a commercial current account in Canada (online)? 

 Opening a business account, both the director and his company must provide the necessary documents and pass the identification.

By the director (owner) he must provide such documents:

  • passport
  • one more document, like credit card or drivers license 

The list of documents from the company that must be filed depends on its form of ownership:

Sole Proprietorship

  1. Trade name registration if you use it
  2. Master business license if it is required by Canadian legislation

Partnership and limited liability

  1. Original of the registered declaration of partnership
  2. Trade name registration if you use it
  3. Copy of partnership agreement

Corporation

  1. Two pieces of identification of managers  who will have signature rights
  2. Certificate of Corporate Status
  3. Business Number
  4. Corporate Profile Report
  5. Certificate of Existence
  6. Certificate of Compliance
  7. Company's Annual Report for the last fiscal year
  8. Notice of Assessment for Income Tax
  9. Trade name registration and current licenses (if you use them)

Unincorporated Association

  1. Bylaws and association's original constitution

As a rule, you can fill an application online and attach the mentioned documents to the form or send them by post. But usually, the responsible manager will have to visit the branch to finish the application process and, for example, to get corporate cards or chequebooks after the opening the account. Financial organizations usually open a business current account during a few days after providing all the necessary documents.

Business current accounts in Canada can be opened by both nationals and non-residents.

Findings

So, a commercial day-to-day account is a perfect way of receiving payments for commodities and services, paying invoices from suppliers, buying assets, paying salaries and duties. A financial account also will help your company to control the firm’s expenditures, incomes and other cash flows.

When selecting the settlement product from the variety of proposals the director should consider commissions for such operations: servicing of your account, making online transfers, cashing checks, withdrawals at ATMs and tills, crediting of funds, international operations, the size of percentage rates, and limits, like the number of free transactions, the minimal balance.

To receive the maximum out of the settlement servicing at a financial organization, the responsible manager should also take into the account such possibilities, like: the credit and savings options, the number and the location of branches and ATMs, the Internet banking program, the cost of servicing of salary and corporate credit cards, free bonuses from the financial organization.

It is needed to pass identification for both the director (owners) and the company to open a business current account. Commercial accounts in Canada can be opened by both resident and non-residents firms.


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