Starting a small business is an exciting and hopeful venture. Whether you’re opening a café, launching an online shop, or offering consulting services, one of the best investments you can make early on is in a solid financial foundation. Getting your finances organized from the start will save time, reduce stress, and help your business grow sustainably.
1. Separate your personal and business finances
It may be tempting to use your personal bank account for early expenses, but keeping your business finances separate is crucial. Opening a dedicated business account helps with record-keeping, tax filing, and building credibility with suppliers and lenders.
In Ontario, you’ll need your business registration documents to open a business account. Most financial institutions including Kindred offer business chequing and savings accounts designed for small enterprises.
2. Register your business properly
Before you can open accounts or apply for financing, ensure your business is legally registered.
- You can register online through the Service Ontario Business Registry for a modest fee.
- If you’re forming a partnership or corporation, additional documentation and a federal Business Number (BN) from the Canada Revenue Agency (CRA) are required.
This registration allows you to open a business bank account, collect HST (if applicable), and apply for permits or licenses relevant to your field.
3. Establish a bookkeeping system
Accurate record-keeping is the backbone of financial success. Choose a bookkeeping method, whether digital or a spreadsheet system, and maintain it regularly.
Track income, expenses, and receipts from day one. Many entrepreneurs find it worthwhile to hire a bookkeeper or accountant early on, even part-time, to ensure accuracy and compliance.
4. Understand your tax obligations
If your business earns more than $30,000 in annual taxable revenue, you must register for an HST number with the CRA. You’ll then need to charge, collect, and remit HST on applicable sales.
Set aside a portion of your revenue (typically 20–30%) for income tax and HST remittance to avoid surprises at tax time. You may want to keep a separate savings account for tax funds.
5. Plan your cash flow
Many small businesses are profitable on paper but struggle with cash flow. Find a simple forecasting tool that tracks expected income and expenses each month (your bookkeeper might provide this service, or look online). This helps you anticipate when funds will be tight, identify when to seek a line of credit, and plan for seasonal fluctuations. A strong relationship with your account manager at your financial institution can help ensure access to short-term financing when needed.
6. Protect yourself and your business
Insurance is an often-overlooked but vital step. Business liability coverage, property insurance, and sole proprietor disability coverage can protect against unexpected losses. Consult a trusted advisor familiar with Ontario’s regulatory environment.
7. Build a relationship with your financial partner
Choose a financial institution that understands small business needs and shares your values. You want to develop a relationship with an account manager who understands the local business environment, and can offer tailored advice. Your account manager should help you navigate complex processes such as loan applications or payment solutions. You want them to be able to anticipate your needs and flag opportunities or risks early on.
Starting your business with sound financial habits builds confidence and resilience. With thoughtful planning, reliable advice, and a clear sense of direction, you’ll be well-positioned to turn your small business dreams into sustainable success. Meet with a member of our Business Banking Team to learn how Kindred can offer you the solutions to your business needs.