Do I need a business bank account?

Managing payments is an essential part of running a business. While you need an account for this, it doesn't have to be from a traditional bank, as non-bank providers also offer business accounts with valuable features and benefits. 

Traditional business bank accounts often come with high fees, slow processing times for international transfers, and limited software integration capabilities. 

In contrast, non-bank providers like Airwallex can provide lower fees, fast international transfers, and additional capabilities that can streamline and enhance your financial management. When considering a business account, it’s worth exploring alternatives that may better suit your business needs.

Five benefits of using a business bank account in Canada

As a sole trader starting out or growing your business, you might not need a separate business bank account, although it can make a lot of sense. Having a dedicated account for your business that’s used to manage all business-related transactions can help:

1. Boost credibility: First impressions matter. A dedicated business account shows suppliers and customers that you're serious about your business. It helps present a professional image and build trust with your suppliers and customers.

2. Organise financial records: Combining personal and business transactions can make bookkeeping unnecessarily time-consuming and complicated. Using one account for all business-related transactions helps simplify this process and reduce errors. 

3. Simplify tax time: Organised bookkeeping makes a big difference at tax time by making it easier for you and your accountant to collect financial information. Linking your business bank account to your accounting software can further automate this process. Consult your accountant for more details on potential tax implications.   

4. Track performance: Keeping an eye on cash flow is vital for any business. A business bank account makes it easier to track, monitor, and manage income and expenses. With regular reviews, you can make quick adjustments to your business that help keep you on track with your targets. 

5. Support future loan applications: If you think you’ll want credit or a loan for your business in future, you’ll need to provide evidence of your business financials and cash. A dedicated business bank account can help build that evidence and a credit rating separate from your personal profile.

How to choose the right business bank account

With so many business banking options from the big four and challenger providers, finding the right one for your business can feel overwhelming. To help choose the best fit for your business, there are some key questions you need to consider.  

What are your specific needs? 

Start your search by thinking about what your business needs from a bank account now and in the future. Ideally, your bank account will accommodate your business as it grows and evolves. Here are some key things to consider:

• Transaction type and volume: If your business deals with cash, you may need a bank with nearby branches to make deposits. Mobile apps and a reliable online banking system might be more important if you operate mostly online. 

• Global payments: Trading across borders requires additional services to help you manage international transfers, foreign exchange rates, and payment workflows.  

• Customer support: Customer support from your bank can impact the service you provide to your customers. Having access to 24/7, responsive service can help you quickly address any issues and minimise the customer impact. 

Identify the types of transactions and services you need and use this as your key criteria when reviewing features across different bank accounts.  

What fees are involved? 

Different business bank accounts offer various fee structures, including monthly charges, transaction-based fees, and foreign transaction fees for global business activities. It's important to consider these fees carefully and choose an account that aligns with your business needs to avoid unnecessary costs.

How easy is it to use?

While fees and features are important, service and convenience are also important, as they can impact your bottom line and the customer experience. Things to look out for include:

• Customer service via a channel and times that suit you

• Mobile app navigation and features

• Software integration capability

• Speed of international transfers

• Access to reporting

• Ability to support multiple users

• Capacity to hold multiple currencies

Bonus Tip: Talk to other business owners and read reviews online. Seeing what others like you think and learning about their experiences can help you make an informed decision.

What are the alternatives to a traditional business bank account?

The growth of non-bank financial services providers such as challenger banks and fintechs has opened up new possibilities for businesses beyond traditional bank accounts. As smaller, agile companies, they can produce innovative products and services that suit the needs of businesses operating in an increasingly online and global environment. 

Online-only business bank accounts

Online-only banks operate entirely online, making them a good option if you prefer managing your money digitally. They usually have lower fees and are easily accessible from anywhere. However, they lack physical branches and may not offer some traditional banking services.

Payment services

Payment services like PayPal, Stripe, and Square allow you to accept payments without a traditional bank account. These services are great for businesses mainly taking online payments because they’re easy to set up and provide quick access to funds. The downside is that they charge fees per transaction, which can add up fast if your business has a lot of transactions.

All-in-one business accounts 

Non-bank providers such as Airwallex offer all-in-one business accounts that help businesses grow and operate globally. For example, our global accounts for international business payments offer multi-currency accounts, high-speed international transfers, and borderless cards — all in one platform.

Benefits of using Airwallex Business Accounts

Our Airwallex Business Account is designed as an all-in-one account to help your business operate and grow globally. The benefits for businesses operating across borders include:

• Centralised systems for all operations: With Airwallex, you can manage all your financial operations in one place. This centralisation simplifies managing bill pay, currencies and FX, international transfers, andother financial activities, reducing the complexity and time spent on administrative tasks.

• Flexibility to support growth: Our business accounts include flexible, scalable features designed to adapt to your business’s changing needs and support growth. 

• Tech-first systems: Airwallex leverages advanced technology to create a user-friendly and efficient platform. This technology-driven approach supports seamless integration with other tools and creates a smooth, intuitive experience for managing your finances.

• Constantly evolving features: At Airwallex, we continually update features to align with our customers' business needs. This means you’ll have access to the latest tools and services, helping you stay competitive and efficient.

The Canadian eCommerce business that streamlined global payments with Airwallex

Dalstrong, founded by CEO Dave Dallaire, has expanded its premium culinary tools business globally. To manage international transactions efficiently, Controller Edward Agaba identified the need for a business account capable of handling multiple currencies without incurring high conversion fees.

Traditional platforms like Amazon charge a 2.5% foreign exchange fee when converting foreign revenue to USD. By adopting an Airwallex Global Business Account, Dalstrong can hold funds in currencies such as CAD and EUR, enabling direct supplier payments and avoiding double conversion fees. This transition has streamlined their financial operations, reducing foreign exchange transaction preparation time from six to two hours weekly.

Agaba noted, "Switching to Airwallex saves us 2.5% right away compared to Amazon’s fees." The Airwallex business account not only supports Dalstrong’s online growth but also lays the groundwork for their future in physical retail, proving essential for managing costs and maintaining liquidity as they scale.

Making the right choice

Choosing the right business account is an important decision. It can help you save money, improve customer experience, and simplify financial operations. Take your time to consider your needs, compare options, and make an informed decision. The right choice will support your business growth and make managing your finances easier.

FAQs about Business Accounts

1. I’m a sole trader. Do I need a business account?

You’re not legally required to have a business bank account if you’re operating as a sole trader. However, separating your business and personal finances can help with better financial management and simplified tax reporting while providing a solid foundation to support future business growth. 

2. How much money should I put in my business account?

How much you need depends on the nature of your business. Ideally, you would have enough cash to cover your short-term expenses and a buffer to cover unexpected costs. 

3. Will I get taxed more if I use a business account?

The type of bank account you use does not directly influence how much tax you pay. However, clear financial records can help you and/your accountant better manage your tax obligations.