How to Open a Business Bank Account in Canada - A Full Guide 2024

If you run a Canadian business you may need a business bank account to run your company, file taxes, and keep on top of your accounting. But even if you’re not legally obliged to have a business account - as a freelancer or sole trader for example - you may still decide that getting one is a smart move. Specialist business accounts can make it easier to review and arrange your company finances, access business services and support, and features designed to bring down the cost of common company transactions, too.

This guide covers all you need to know about business bank accounts in Canada, including who needs one, how to open one and how much they cost. Because business accounts offered by banks aren’t always the cheapest or most convenient option, we’ll also take a look at alternatives from specialist services like Wise and OFX. More on that later.

What is a business bank account?

A business bank account is a bank account used to transact on behalf of your business. You’ll use it to receive funds from customers, pay suppliers and contractors, and get both top level and detailed insights into your company cash flow and performance.

Business accounts typically come with a range of features and benefits specifically aimed towards company owners, freelancers and sole proprietors. We’ll dive into the full range of business bank account benefits a little later.

Does my business need a business account?

The type of business you run will influence whether it’s a legal or practical requirement for you to have a separate business bank account.

The most common business entity types in Canada are:

• Sole Proprietorship

• Partnership

• Corporation

If you have a partnership or corporation, the chances are that you’ll be legally obliged to have a separate business bank account. That’s because you’ll need to keep your personal and company finances separate so you can file and pay taxes. If you are a freelancer or sole proprietor you probably don’t technically need a business bank account - although one can certainly be useful.

If you’re a sole proprietor registered in a name other than your own, you’ll probably need a business account on a practical level so you can bill customers professionally. More on why you may want a business bank account even if you don’t legally have to have one, next.

What are the benefits of having a business bank account?

Even if you’re not legally obliged to get a business bank account, having one can bring some great perks and make it easier and cheaper to transact on behalf of your business.

Here are some key benefits to having a Canadian business bank account to consider:

• Business accounts often have lower fees for common company transactions

• Use your business account to analyse and track company performance, cash flow and other key metrics

• Many business accounts offer tools to cut admin like accounting integrations and batch payment options

• Get a business account with a linked debit card and multi-user access, so you can delegate tasks and give your team the tools needed to do their jobs

• Some business accounts have multi-currency options, to get paid from customers overseas, run international payroll and pay suppliers abroad

• Invoicing clients through a business account - in your company name - looks more professional than using a personal account

• You may be able to access additional business support and resources through your account provider

How to choose a business bank account 

Choosing the right business account first time will save a lot of hassle - and can also cut your costs and boost profit. There’s no one-size-fits-all approach here. The right account for you will depend on your business type, size, stage and personal preferences. Here are a few things to consider when choosing:

• Are there ongoing fees you’ll need to pay on a monthly or annual basis?

• What are the transaction costs - especially for common transaction types?

• How easy is it to use the account, and what support is available if you need help?

• Are all the services you need available from the same provider?

• What are the costs of international transactions - getting paid by customers overseas, and paying international suppliers for example?

Earlier we touched on the fact you don’t necessarily need to go to a bank to get a business account. An alternative is to look at specialist providers which can offer business accounts which allow you to manage day to day finances, and may also offer additional features not available through banks. To give a flavour of some options, let’s compare some key points from a couple of specialists - Wise and OFX - against business accounts from 2 of Canada’s largest banks.

*Other  business account options are available from TD Bank and Scotiabank, which have their own features and fees - check the full details online for more

How much does it cost to open a business account?

Canadian business accounts from online providers and banks have their own pricing models which can vary quite significantly. If you’re looking for an account with low or no ongoing fees, a specialist provider may offer the best value. However, if you’d rather pay a set monthly fee and have a number of free transactions rolled up into the costs applied, a traditional bank may serve your needs well. Here’s a look at the basic costs for operating an account with the providers we profiled earlier.

How to open a business account in Canada

If you want to open a business bank account with a traditional Canadian bank you’ll pretty much always need to visit a branch in person. You can call the bank first to talk through your application, check your eligibility and make sure you’re clear on the documents needed in your particular situation, but then in most cases you’ll have to make an appointment to go to a branch and get verified.

Online providers may offer an easier verification process which can be carried out online.

Whichever route you choose to take, the basic steps are usually the same:

1. Choose the provider and account that suits your needs

2. Check and gather all the information and documents required

3. Complete the application form in hard copy or online

4. Provide your documents to the provider - either uploading digital copies or presenting them in a branch

5. The bank or provider will verify your account, which may be instant, or may take a day or two

6. Once your account is verified you’ll be able to add funds, and get your linked card for easy spending

What do I need to open a business bank account?

The documents you need to open your account will depend on the type of business entity you have, and how long it has been operating. In all cases you’ll need to provide your own ID - and often information and ID for any other major stakeholders. You’ll also need to prove the legal registration and name of your company.

Here’s an outline of the documents you’re likely to need if you have an incorporated business in Canada:

• Articles of incorporation/association

• Your business name registration, if applicable

• Your government-issued photo ID

• Name, address and occupation of all those owning at least 25% of your business

How long does it take to open a business bank account?

How long it takes to open your business bank account will depend on the provider you select. Verification can take a day or two, after which you’ll get full access to your account to start transacting.

Can I open a business bank account in Canada as a non-resident?

Non-resident business owners can open company bank accounts in Canada - although in practice, banks may limit the options which are available to non-resident customers. That may mean you need to fulfil strict eligibility criteria, or accept an account which doesn’t have all the functionality offered by a resident bank account.

Check out the non-resident business bank account options from your chosen provider - and compare them against some online and alternative accounts, which are often available regardless of residency.

Can I open a business bank account online?

Traditional Canadian banks typically require you to visit a branch in person to open your account. However, you may be able to get a business account from an alternative provider online or via the provider’s app. Check out options like Wise and OFX for an entirely online onboarding experience with no need to visit a branch in person.

Can I switch business bank accounts?

Yes. If you decide the bank you use doesn’t offer the best available value for your business, you’re free to switch to another provider. You’ll need to double check if your existing account has any early closure fees or other costs to pay when you change - but you’ll often find that the provider you’re moving to can offer a specialist switching service to help support the move.

Types of business accounts in Canada

You’ll have a broad range of options when it comes to finding a Canadian business account, looking at both traditional banks and alternative providers. Here are a few common account types to consider:

• Everyday banking plans which may have low monthly fees, or a higher ongoing charge with some free transactions included

• Pay as you go type accounts which have no monthly costs but higher service fees for the transactions you require

• Unlimited plans which have monthly fees but no charges for common transactions

• Specialist business accounts for specific industries, like agriculture

• Savings and investment accounts for businesses

• Multi-currency accounts to allow companies to pay and get paid in foreign currencies more easily.

With so many options to consider, doing some research is essential to help you find the perfect business account for your needs. Think carefully about how you’ll need to use the account, including common transactions and how you anticipate your business growing in future, to find an account which will serve your business today and moving forwards.

If you're interested in sending and receiving payments in foreign currencies, these guides might help: Best Euro business accounts and Best international business accounts

Conclusion

Opening a business bank account is a smart move - and may be legally required depending on the type of business entity you own. Business accounts often come with features and perks which aren’t available to personal customers, in order to make it easier, cheaper and faster to transact on behalf of your company.

Canadian business accounts are available from all the major traditional banks, as well as a good range of online and specialist account providers. You’ll be able to find an account which suits your needs, based on your business type and personal preferences, using this guide as a starting point. Compare the options available from both old school banks and alternatives, to find your perfect fit.