If you run your trade as a sole proprietor, no Canadian law forces you to open a separate business bank account. The Canada Revenue Agency (CRA) does not require it, and because a sole proprietorship is not a separate legal entity from you, a personal account is technically allowed if you operate under your own legal name. A corporation is different: it is a separate legal entity and must have its own account. Even for a sole prop, a dedicated account is strongly advised, and it becomes effectively necessary the moment you trade under any name other than your own.
Sole proprietor: allowed to use a personal account, but do not
There is no federal statute that makes a sole proprietor open a business account, and the CRA does not mandate one. You and the business are the same taxpayer, so the money is legally yours either way. That is the technical position. In practice, mixing personal and business transactions in one account creates a mess that costs you far more than the monthly fee you saved, especially at tax time and during a CRA review.
Two clear tipping points push a sole prop into a separate account:
- You trade under a business name. If you operate as anything other than your own legal name, you need a business account to deposit cheques made payable to that name. The bank will ask for your trade-name registration to open it.
- You register for GST/HST. Once you cross the $30,000 small-supplier threshold and start charging tax, you must track input tax credits cleanly. Untangling business expenses from grocery runs in a single personal account is exactly the kind of record-keeping the CRA scrutinizes. See Record-Keeping for the CRA.
Corporation: a separate account is not optional
A corporation is a distinct legal person. It must bank in its own name. Running a corporation's money through your personal account risks "piercing the corporate veil," which can strip away the liability protection that incorporating was supposed to give you. If you are incorporated, open the account before you take your first payment.
What you need to open an account
The documents depend on how you are set up:
- Sole proprietor, own name: government-issued photo ID and your Social Insurance Number (SIN).
- Sole proprietor, trade name: photo ID plus your trade-name registration certificate.
- Corporation: articles of incorporation, your CRA Business Number (BN), and director information.
Most major banks let you apply online, though some corporate accounts still need a branch visit. Minimum opening deposits vary by bank, and several have none.
Typical fees, and how to keep them low
Monthly fees and transaction limits change often, so always confirm the current plan and price with the bank before you sign up. As a rough shape of the market, the big banks run tiered plans: a low-cost basic plan with a handful of free transactions, mid plans bundling 30 to 60 transactions, and unlimited plans that often waive the fee if you keep a high minimum balance. Several banks offer a no-monthly-fee online business plan aimed at low-volume startups, and newer digital providers also compete with low or no monthly fees.
For a solo tradesperson starting out, a low-cost or no-fee online plan usually fits, because your transaction count is small. As you take on a crew and your volume climbs, an unlimited plan can work out cheaper than paying per transaction. Check the current price and the fee-waiver balance before choosing, since both move.
Common mistakes
- Running corporate money through a personal account. This can cost you the liability shield incorporation was meant to provide.
- Waiting until tax time to separate things. Reconstructing a year of mixed transactions is painful and error-prone. Open the account on day one.
- Choosing on monthly fee alone. A cheap plan with few free transactions can cost more than a pricier unlimited plan once your volume grows.
- Assuming a sole prop must incorporate to get a business account. You can open a business account as a registered sole proprietor.
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