Recommended Account Setup for Business Owners
This article covers the accounts most Canadian small business owners need, what each one is for, and how they connect to your bookkeeping.
What You'll Need
- Your registered business (sole proprietorship or corporation)
- Your Business Number (BN) from the CRA
- Your Certificate of Incorporation (corporations only)
Normal Procedure
The core accounts
Business Chequing Account
Your primary operating account. All business revenue comes in here, and most expenses go out from here. This is the account you connect to QBO for your bank feed.
Every business needs one. Keep it completely separate from your personal chequing account.
Business Savings Account (optional but recommended)
A separate account to hold money you're setting aside, your tax reserve, an emergency fund, or capital for a future purchase. Moving money here intentionally prevents you from spending it accidentally.
Recommended savings targets to build toward:
- Tax reserve: 15 to 25% of net profit set aside for corporate income tax
- GST/HST reserve: The full amount of GST/HST you collect, held until remittance
Business Credit Card (optional but useful)
A dedicated business credit card keeps business expenses clearly separated and builds business credit history. Pay it off in full each month from your chequing account to avoid interest.
If you use a personal credit card for business expenses, those transactions are harder to track and require your bookkeeper to sort through personal charges to find the business ones.
Accounts to avoid
Personal accounts for business use
Using a personal account for business is the single most common bookkeeping mistake. It mixes two sets of records that need to stay separate, and it creates significant cleanup work. Every transaction has to be manually reviewed to separate personal and business. It can also create problems if the CRA ever audits you.
Multiple chequing accounts without a clear purpose
More accounts are not better unless each one has a defined role. Unnecessary accounts create more reconciliation work without adding value.
Setting up accounts in QBO
Once your bank accounts are open, your Mesa CPA team will add them to QBO and connect the bank feed. Each account gets its own register in QBO so transactions flow in separately and reconciliation is clean.
See: How to Connect Your Bank Account in QuickBooks Online for the connection steps.
Abnormal Procedures
You have been using a personal account for your business.
Stop as soon as possible and open a dedicated business account. Your Mesa CPA team will need to go back through your personal statements and identify which transactions were business-related. The longer this goes on, the more cleanup is required.
Your bank does not offer a business account.
Most major Canadian banks (RBC, TD, BMO, Scotiabank, CIBC, National Bank) offer business chequing accounts. Credit unions and online banks (Wealthsimple Business, Relay) also offer business accounts, often with lower fees. If you're currently banking somewhere that does not offer a business account, it is worth switching.
You operate in multiple currencies.
If you receive payments in USD or other currencies, you may want a separate foreign currency account. Talk to your Mesa CPA team before setting this up, as multi-currency bookkeeping has specific requirements in QBO.
FAQ
Does it matter which bank I use?
Any major Canadian bank works. The main considerations are monthly fees, transaction limits, and how well the bank's feed connects to QBO. Your Mesa CPA team can advise if you're choosing between options.
Can I use one account for both personal and business if I'm a sole proprietor?
Technically there's no legal requirement to separate them as a sole proprietor (unlike a corporation, where it's essential). In practice, mixing them creates significant bookkeeping complications and makes it very difficult to see how your business is actually performing. Separate accounts are strongly recommended regardless of your structure.
How much should I keep in my business chequing account?
A common target is 1 to 3 months of operating expenses as a float, with anything beyond that moved to savings or invested. Your Mesa CPA advisor can help you set a target based on your specific business.
Should I get a business line of credit?
A line of credit is useful for managing cash flow gaps (e.g., waiting on a large invoice to clear). It's not necessary from day one, but worth establishing once your business has a few months of banking history. Talk to your Mesa CPA advisor if you're considering it.