How to open a business bank account in Canada
Written by Tommy Zhang
Banks in Canada
The banking sector in Canada is well-developed, stable, and regulated by the Office of the Superintendent of Financial Institutions (OSFI). The OSFI oversees and regulates all banks operating in Canada to ensure they comply with federal laws and maintain financial stability. Canadian banks are classified into three main categories: Schedule I Banks, Schedule II Banks, and Schedule III Banks. One of the characteristics of Canada’s banking industry is its sound operations and strict supervision. Canadian banks performed well during the 2008 global financial crisis without major losses or failures. This is due to Canada’s prudent financial regulatory system and the bank’s own risk management capabilities. OSFI, the Canadian financial regulatory agency, implements strict supervision of the banking industry to ensure that banks maintain good capital adequacy ratios and risk control. In general, after more than two hundred years of development, the Canadian banking industry has become the mainstay of the Canadian economy. Strong risk management capabilities, diversified services and extensive branches are its main features.
Step 1: Choose a suitable bank.
- Research and compare offerings, fees, packages, and requirements from the major Canadian banks like RBC, TD Canada Trust, Scotiabank, BMO and CIBC.
- Consider factors like branch locations, online banking features, credit products, and customer service.
Among the five major banks, the most recommended one is RBC Digital Choice Business Account. Royal Bank’s electronic business account has a monthly fee of only $5 and does not limit EFT transfers (income and payments)! The second is TD Every Day Business Account, a daily business account from TD Bank. This account has three plans to choose from, with different fees and number of transactions.
Step 2: Gather necessary documents.
You will typically need to provide:
· Two pieces of valid government-issued ID for all account signers
· Articles of incorporation or articles of association
· Business registration documents and business number
· Partnership agreement or declaration of sole proprietorship
· Anticipated transaction volumes and amounts
· Signed banking resolution with details on authorized signers
· Occupation and industry information
Here’s a breakdown of the key considerations for each audience group when opening a business bank account in Canada:
1. National or permanent resident of Canada:
- As a Canadian citizen or permanent resident, you have the easiest path to opening a business bank account.
- You’ll need to provide personal identification, proof of address, and business registration documents.
- You can choose from a wide range of banks and account types to find the best fit for your business needs.
- Some banks may offer special promotions or discounts for Canadian-owned businesses.
2. Student:
- As a student in Canada, you can open a business bank account, but you may face additional requirements.
- You’ll need to provide proof of enrollment in a Canadian educational institution along with your personal identification and business documents.
- Some banks, like CIBC, offer specialized student business accounts with lower fees and tailored services.
- International students may face more stringent requirements, such as providing a study permit or passport.
- Banks may have specific criteria for student businesses, such as a minimum deposit or transaction volume.
3. Foreigner not residing in Canada:
- Opening a business bank account as a non-resident can be more challenging and may require an in-person visit to a Canadian branch.
- You’ll need to provide extensive documentation, including personal identification, business registration, and proof of business activities in Canada.
- Banks will likely conduct a more thorough background check and may have higher minimum balance requirements for non-residents.
- You may be limited to certain account types or services due to your non-resident status.
- Consider working with a bank that has a global presence, such as HSBC or Scotiabank, as they may be more experienced in dealing with international clients.
\Regardless of your residency status, it’s essential to research and compare different banks and their offerings to find the most suitable option for your business. Consulting with a bank’s business advisor can help you navigate the specific requirements and find the best solution for your unique situation.
Other way to open your bank account.
The exact documents required vary by bank. Check the business account opening checklists on the bank websites for specifics.
Step 3: Apply for the account.
- For sole proprietorships and general partnerships, you can often apply online.
- For incorporated businesses, you usually need to apply in-person at a branch. Call ahead to
book an appointment.
- The bank will review the application and documents. Account opening can take anywhere from 1–2 days to a couple weeks depending on the situation.
Step 4: Fund the account and set up banking.
· Once approved, fund the account with the minimum initial deposit, which is typically $500-$1,500.
· Order cheques, deposit slips, and a business debit card.
· Enroll in online banking and download the mobile app.
· Consider other products like a business credit card, merchant account, and payroll services.
Fees and charges:
- Monthly account fees range from $0 up to $50 depending on the bank and package
- Transaction fees apply for most plans, around $1.25 per transaction over the monthly limit
- Fees can often be reduced or waived by maintaining a minimum balance, usually $20,000-$50,000
Different banks will have different pricing systems. For more information, you need to learn more on the official website. The following is the fee details of RBC Bank for RBC Digital Choice Business Account.
Applying for a Business Bank account typically takes about 30 minutes. After you’ve applied, such straightforward businesses can usually expect a decision within 48 hours.
Opening a business bank account is a crucial step in the process of starting a business in Canada. By carefully assessing your needs, preparing the necessary documents, and working with the bank’s business advisor, you can find the most suitable account type for your company. A well-established business account not only provides convenience for your daily business operations but also helps you better manage your company’s finances and build credit, laying the foundation for your enterprise’s long-term growth. Choosing a reputable bank with excellent service as your partner allows you to focus on expanding your business while the bank safeguards your interests, together creating a brilliant chapter in your Canadian business journey. May your business thrive and achieve great success in Canada!
Reference
Wikipedia contributors. “Big Five banks of Canada.” Wikipedia, The Free Encyclopedia. Wikipedia, The Free Encyclopedia, 3 Apr. 2024. Web. 28 Apr. 2024.
https://www.rbcroyalbank.com/business/accounts/digital-choice-business-account.html