Once you've incorporated your business, one of the first tasks should be to open a business bank account. This is crucial to ensure that your business and personal finances remain separate.
Below you'll find four reasons why it's important to create a business bank account that's unique for your corporation.
1. Accurate Bookkeeping
You are required by law to keep separate records of your transactions to support your business's income and expenses. With a separate bank account, it will make accurate bookkeeping much easier. For example, you'll be able to quickly match your business's bank statements to your expense receipts.
Your personal bank account is in your personal name. Once you've incorporated your business, you've created a new 'person' at law. This means that it needs its own bank account in its own name. This will also ensure that when customers write cheques to your business or deposit money to your bank, it will be under your business name.
Having a separate business bank account is also an important step to retain limitation of liability between your business property and personal property. If there is no separation between the financial activities of your business and your personal finances, it may lead a court to find you personally liable for business debts.
A separate bank account will also be important if your business is ever audited by the CRA. You do not want to commingle business and personal finances and bank accounts.
4. Credit Card
Lastly, consider obtaining a separate business credit card. It offers many of the same benefits of a separate bank account, including making it incredibly easy to separate business and personal expenses.