Key Advantages You May Have Overlooked

Micro-Sized businesses have become more commonplace in recent years, driven in part by the move toward gig work and changes in the economy overall. Many owners of these businesses do not think they are big enough, or important enough, to need a separate bank account. That perception is mistaken. No matter what your reason for starting a business is, you want to open a dedicated bank account as soon as possible.

Here are some of the advantages of having a bank account for your super-small business.

Easier Accounting

Micro-small business accounting can be a complicated matter, especially if your business is growing fast. If you simply place your business profits in your personal account, distinguishing actual business revenue from other sources of income can become a very daunting task.  Having a dedicated bank account will give you an easy way to separate those earnings and segregate that income, making your accounting simpler in many different ways. You can further simplify your accounting by paying for all of the business-related expenses from the same bank account.  A business-dedicated credit card can also go a long way to making your accounting simpler.

Simpler Tax Preparation

Running a business means paying taxes.  The preparation of a micro-sized business return can get pretty complicated pretty fast.  Having a dedicated bank account for your super small business can be beneficial when preparing your tax return and answering questions from the CRA.

Usually, businesses can file their tax returns without a lot of fuss.  However, there are times when the government will have questions.  Funnelling your business income and expenses through a single bank account will make answering these questions easier to prove and back up. The tax simplification alone can make a dedicated bank account worthwhile, so think about these benefits before you decide you do not need one.

Eligibility for Loans and Grants

When you open a dedicated bank account for your business, you may be asked if you are seeking to open a business account or a personal account by the bank.  Opening a business account means that the business has to be registered with the province.  You can do this by registering a tradename for a cost of about $75.  This registration has its advantages. 

Having your super small business officially registered in your province and with the CRA can make you eligible for low-interest loans and grants. It may also make you eligible for courses and advice from the local governments and chamber of commerce.  Being registered makes your business more legit to both potential customers and partners.

Setting up a dedicated bank account for your micro-sized business may be something you think you do not need. It is easy to overlook this step when getting your business off the ground.  You might want to think twice before you skip this important step.