The #1 thing people do after they incorporate a company is go to the bank to open an account for their new corporation. And that’s a good thing because you want to keep your corporate finances separate from your personal finances or the finances of any affiliated companies.
The process of opening a corporate bank account can be complex and involves several steps. In this article, we will outline the process for opening a corporate bank account in Canada.
Choosing the Right Bank for Your Needs
The first step to opening a corporate bank account is to research and choose the right bank for your business needs. Consider factors such as the proximity of bank branches to your normal workplace, fees for business banking products, programs available for small and medium-sized enterprises, ease of online banking, etc. It’s best to compare multiple banks to find the one that aligns with your requirements.
If your corporation is owned just by one person or a small group of family members, then it might be easiest to open a bank account with the bank you use for personal banking. Using a bank with which you already have a personal account will help speed up the process for you. It will also make it easier for you to transfer funds between personal and corporate accounts in the future. And if you can log in to one online banking site to see both your personal and business accounts, then it becomes easier to keep the pulse of your finances.
In Canada, we also have some great credit unions to keep in mind. Credit unions offer many of the same products as banks and can sometimes be even more competitive than banks. Credit unions also tend to offer more hands-on, customized services. Be sure to consider credit unions right alongside banks when deciding where to open your corporation’s bank account. Whenever we refer to “banks” in this article, we also include credit unions.
Some popular banks in Canada are:
Some popular credit unions in Canada are:
In-person or online?
To open a bank account for your corporation, you may or may not need to visit the bank in person.
If you already have a personal account with the bank, then nine times out of ten, you will not need to visit the bank in person; you should be able to open the account online or over the phone.
If you are trying to open a bank account with a bank with which you have no existing relationship, you might need to visit a branch in person—it depends on the bank. Some banks now have the option of opening a new account online, even if you do not have an existing personal account with them.
If you are not a Canadian resident and do not have a personal account with a bank in Canada, then you will almost certainly be required to visit the bank in person.
Opening Account—Paperwork
Regardless of whether you are opening the account in person or online, you will need to complete a bunch of paperwork provided by the bank.
The bank will first need to see documents that prove who you are (usually two or three pieces of photo identification and mail with your name and address on it, such as utility bills). The banks will also need a number of documents with information about the corporation; you can take a close read through our earlier article on what documents are needed at the bank. You can easily find all of those documents on our tobuso.ca account.
Once the banker reviews all those documents (and inputs the data directly into their banking system), they will generate numerous account opening documents for you to review and sign. One of the documents may include a corporate resolution authorizing the opening of the account. Be sure to ask the banker if you have any questions about the paperwork.
Once everything is signed, you should keep a copy of the documents and, better yet, upload them to your account at tobuso.ca.
Designate Signatories and Authorized Users
During the account opening process, you will designate authorized signatories and users who can operate the account on behalf of the corporation. You’ll also need to decide whether they will need to sign jointly or whether one signature is enough. These individuals will have the authority to sign checks, make transactions, and access the account’s online banking services. Ensure that you have the necessary documentation to designate the appropriate individuals as signing authorities for the corporation.
The best practice is to pass a directors resolution specifically authorizing certain individuals to sign banking documents on behalf of the corporation. You can log in to your account at tobuso.ca to easily put in place a resolution authorizing specific people to sign on behalf of the corporation.
Initial Deposit and Account Funding
Most banks require an initial deposit to activate the corporate bank account. The amount required varies depending on the bank and the type of account chosen. Be prepared to provide the necessary funds to open the account.
Set Up Your Online Account
Most banking is done online these days. Once you have set up your corporate account, make sure to log in for online banking right away so that you can see how it works and adjust the settings to your preferences. Be sure to choose electronic delivery of statements since it makes for more convenient bookkeeping down the road.
Build Relationships With Your Banker
Regardless of where you choose to open your corporation’s bank account, be sure to build a relationship with bankers at your local bank branch. The banking system in Canada still depends on trust (in many different ways). The more the bankers at your local branch know you and your business—and trust you to be a reliable and consistent person—the more they will come to bat for you when you’re seeking credit products or trying to manage an out-of-the-ordinary transaction.
We hope this article gives you a better understanding of what to expect when opening a corporate bank account in Canada. As every corporation is unique, we recommend seeking professional advice to help you decide the best strategy for your corporation.
Here at Tobuso, we offer a robust platform for managing and sharing your corporate records—secure and reserved for those you trust. Sign up today!
