Tax Tip
When setting up banking for your small business, think about the costs of banking.
Your business account should only receive business income deposits. You can decide what payments need to come from that account based on your own needs.
All other deposits should go to your personal bank account with a clear description on why the deposit is not income. CRA considers all bank deposits in any of your accounts personal or business as income. You always have to prove the non income deposits are not taxible income.
Usually a personal chequing account is less expensive to use than a business account, so do as many payments as possible from the personal account. Transfer the money you need to pay bills from your business account to your personal account. The transfer and the payments should balance.
As you will be using your personal account to pay business expenses, the banking fees will be tax deductible.
Make sure you enter all payments in your BKS with the business explanation, so that no business expenses fall in the cracks and no non income deposits go into your business income.
DW