For any new small business owner getting set up and opening a bank account is exciting, especially when revenue starts coming in. Follow these useful tips to make the most of the services offered by your bank, while maximizing your savings as your business grows.
- Open a separate bank account for business purposes. Operating your business out of your personal chequing account can make it difficult to distinguish your business transactions from personal ones. Simplify your accounting and keep your banking costs down by opening a business account that helps you track your business expenses.
- Choose a business account that offers flexible transaction limits, as well as low, tax-deductible fees charged only when you use the services. Find out whether a minimum balance is required to avoid fees, and maintain that amount in your account.
- Choose electronic statements with the online options available through your bank. It’s more environmentally friendly, can save you fees if your bank charges for paper statements, and some banks offer financial incentives for changing to paperless billing.
- Pay your bills electronically. StatsCanada shows 68.3 percent of Canadians now use electronic banking for transactions. This growing trend can save you time and the hassle of paying manually. Setting up online bill payments in advance can ensure you pay them on time, helping build both your business’s credit rating and reputation.
- Make the most of payment discounts by scheduling payments as close as possible to the date they are due. Take full advantage of any payment discounts for on-time or early payments and keep and eye on your cash flow.
- Offer your customers an electronic option to pay. Electronic payments can save you time and money on reconciliation, and you will receive (and can use) the funds sooner.
- Set up alerts to ensure you have funds available when payments are due, and consider getting overdraft protection. The most diligent oversight can’t prevent bad timing, for example when a customer takes longer than expected to pay invoices, your bills still need to be paid on time.
- Get a business credit card to help you track your business expenses, while earning points or getting cash back for your purchases. Pay your credit card balance in full within a week or two, to avoid accruing interest. Take advantage of the rewards program for the credit card you choose. You’ll accumulate points that can be used as a payment towards your credit card balance or for benefits such as airline miles.
By reconciling your budget with your bank account weekly, and checking your balance daily to avoid withdrawing more than you should, you can spend more time running your business and less time and money on banking. And if you have surplus cash, consider making it work for you by opening a small business savings account or investing in GICs.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.