How Non-Residents Can Open Business Accounts at Top Canadian Banks

The Canadian banking system is one of the most reliable and respected financial ecosystems in the world. No wonder businesses flock to the jurisdiction to take advantage of the excellent corporate options that it proposes. However, there is another opportunity not to miss in Canada: partnerships in Ontario. You can establish a GP (general partnership) or an LP (limited partnership) to benefit from advantageous conditions for business.

Canadian Banking System: Basics

The Canadian banking sector is considered to be one of the safest ones in the world, and it is divided into five main categories: 

1. charted banks
2. trust and lending companies
3. life insurance
4. securities dealers
5. cooperative credit movement

• Number of bank branches in Canada: about 5,800
• ATMs in Canada: more than 18,500

Services provided to Canadians by the banking system:

• Canada has one of the most accessible banking systems in the world: more than 99% of the country’s adult population have an account with a financial institution.
• The number of banks offering financial products and services to Canadian consumers, including bank accounts, credit cards, loans and investments, equals 40.
• The percentage of Canadians who do not pay a fee for their banking services amounts to 31%.
• 74% of all household debt in Canada consists of mortgage loans, which help to increase equity, another 16% accounts for credit lines, and the share of credit card indebtedness is a mere 4%.
• Canadians are cautious borrowers, so overdue mortgages in Canadian banks remain a rare fact —as of June 2022, only 0.14% of mortgages in the entire banking system are overdue.
• The percentage of Canadians who think that their bank in Canada handles their personal information with due confidentiality level is 87%

Services rendered to small businesses by Canadian banks: 

• Banks of Canada serve nearly 3 million self-employed and small and medium-sized enterprises across the country.
• They lent more than $255 billion to SMEs.

Technology, cybersecurity, and fraud prevention in Canada’s banking system: 

• The percentage of Canadians who believe that Canada’s banking system has become much more convenient thanks to new technologies is 90%.
• Banks are the leaders in Canada in terms of cybersecurity and have invested heavily in this area to protect the financial system and their customers’ personal information from cyber threats.
• Banks invest in technology to prevent billions of dollars spent on crime annually and protect customers from online threats, credit and debit card fraud, identity theft, and mortgage fraud.
• The amount that Canada’s six largest banks have spent on technology over the past decade, including security technologies, reaches $100 billion.
• Banks invest heavily in financial technology and financing or partnering with fintech companies to render state-of-the-industry services to clients and improve internal banking operations.
• The percentage of Canadians who trust their bank in Canada when it offers secure digital banking services is 88%.

You can deposit money in Canadian banks with confidence as they are well-managed, well-capitalized, and well-regulated institutions. Banks in Canada are highly unlikely to go bankrupt. However, even if it happens, deposits in savings and current accounts will be protected up to CAD $100,000 if the bank is a member of the Canadian Deposit Insurance Corporation (CDIC) within the banking system. CDIC is a Crown Corporation established in 1967 to provide deposit insurance and stability to the country’s financial system.

We will talk about the banking system and banks in Canada in greater detail. However, you need a corporate account along with a company, and we would like to present the most appealing legal form of business for non-residents in Canada, an Ontario LP (limited partnership). It is in great demand, and our experts have assisted a considerable number of clients in the registration of partnerships and opening corporate accounts with Canadian banks.

Benefits of Limited Partnership Registration in Canada

1. The Partnership is not considered a taxable entity. All profits earned by your LP are transferred to its partners, and they include this amount into the annual profit tax return submitted in their country of residence.
2. LP’s partners can be general or limited, depending on their responsibility. The data regarding the general partners are made available to the government, while the information on the limited partners is not. 
3. General partners assume unlimited personal responsibility for the debts and obligations of the limited partnership, while the liability of limited partners is limited by their contributions to the partnership. 
4. If you want to protect yourself from personal liability, you can appoint a legal entity as a partner. However, if you wish to designate a legal entity as a general partner, it must first be registered outside the province of Ontario. Such registration provides the company with an Ontario corporation number that allows it to register as a general partner in the LP. This step is associated with additional expenses and takes 3 to 4 weeks.
5. LP registration in Ontario takes only 3-4 business days.

Requirements for LP Establishment in Ontario, Canada

The requirements for limited partnership establishment in Canada for non-residents are not strict: 

• An LP can be registered in Ontario, Canada, by at least two participants: individuals or legal entities.
• The local laws do not set a minimum capital threshold for LPs in Ontario. Partners can freely decide what contribution they want to make to the partnership.
• There are no restrictions on income earned outside Canada.

How LPs are Used in Ontario, Canada

LPs in Ontario, Canada are commonly used as entities associated with considerable upfront costs or investments from multiple stakeholders.

Real Estate: LPs in Ontario are often used in the real estate sector. They typically engage a few partners who jointly purchase a real estate object. The general partner ensures the day-by-day maintenance of the property, controls the lease, etc., while the limited partners receive only a part of the income from the lease or final resale.

Private Equity: LPs in Ontario are also used in the private equity area. Private investment companies buy portfolios of private firms, work to increase their value, and then sell their property at a profit. In the context of direct investments, limited partners can offer initial funding to buy the portfolio, while general partners are involved in the day-to-day company management and steps made to increase the value of portfolio companies.

Small Business: The LP business structure in Ontario is relevant and applicable to small businesses, especially those with high overhead costs, such as retail businesses. Limited partners can offer investments to buy inventory and rent a showcase, and the general partner can work in the store on a daily basis to sell goods and control transactions.

Ontario GP vs LP

Our experts can also help register a general (full) partnership (GP) in Ontario.

It is a commercial organization with two or more general partners with full responsibility. A GP in Ontario is based on an agreement (oral or written) to share the entity’s profits, losses and assets.

A GP in Ontario is a default alternative for businesses with several owners, in the same way as sole proprietorship which is a default business structure for individual business owners.

Partners in full partnership pay income taxes on a personal level. This differs considerably from corporations where profits are subject to double taxation: first at the corporate level and then at the personal level of the owners.

The main difference between GP and LP in Ontario is that the general partners exercise complete operational control and bear full responsibility. Limited partners have less responsibility and do not engage in day-to-day business operations.

The creation of both types of partnership, general and limited, requires that the partners conclude an agreement with each other on the partnership set-up and management.

However, a GP needs just an agreement between partners (which can be verbal) to get started, while an LP requires additional steps to take: you and your partner(s) will need to submit a limited partnership certificate to the Office of the Secretary of State in Ontario. The document appoints a registered agent who can perform the general partner’s duties.

We hope you can clearly see now why Ontario LPs are so popular with entrepreneurs from all over the world. Now, let’s return to the Canadian banking system and banks of Canada.

Canada’s Top Banks

Canada’s banking system is home to five large banks known as the Big Five. 

Here is a list of the major financial institutions in the Canadian banking system ranked by income. These banks provide excellent services and accounts to non-residents.

RBC — Royal Bank of Canada

• The bank was founded in 1864. It has over 1,300 branches in Canada, the United States and the Caribbean.
• The number of clients and accounts served amounts to 17 million.
• Income: 42.8 billion Canadian dollars.
• Corporate bank accounts at RBC are served for a monthly fee that ranges from $5 (for a Digital Choice account package) to $100 (for an Ultimate Business account package). However, you will not pay the fee if the requirements for the minimum balance are satisfied.
• The RBC also provides corporate clients with a Newcomer Package in Canada, including a cash reward for the business.
• RBC online banking will help you control your finances conveniently.

TD Bank

• Toronto Dominion Bank (TD Bank) is recognized as the second bank in North America in terms of financial security (according to Global Finance).
• It operates 1,140 branches and has 11 million customers and accounts.
• Income: $36.4 billion
• You will need to make a minimum deposit of $25 to open a TD Business Simple Checking account and pay a monthly fee of $10 to keep it operational.
• TD Bank also offers five different corporate bank account plans for small businesses, with monthly fees ranging from $19 to $125.
• The best account plan, TD Unlimited Business, offers unlimited withdrawals, transfers and deposits.
• Customers using an unlimited account plan do not pay any monthly fee if they use the financial services provided by TD Bank: Merchant Solutions, TD Digital Express, or TD Small Business Lending.

Scotiabank

• Bank of Nova Scotia (Scotiabank) simplifies access to clients’ funds. The bank is based in Halifax and operates in more than 55 countries.
• Income: $25.3 billion
• A flexible corporate bank account will help you save money by offering differentiated commissions. You will also be entitled to one free transaction for every $1,500 kept in your corporate account.
• For US-based companies, Scotiabank provides a USD account option to help avoid exchange rate fluctuations and currency conversion transactions.

Bank of Montreal (BMO)

• The Bank of Montreal was established in 1817. It currently operates over 1,400 branches and serves around 12 million customers and accounts.
• Income: $22.2 billion
• BMO is one of the most flexible banking solutions for business. The bank offers four plans with a different scope of services available, functions and fees.
• For instance, a small fee of $45 per month is charged for a Mid-Tier Business Builder 2 plan. It does not require a minimum balance and allows 70 transactions per month.
• This corporate bank account plan also gives the right to two electronic transfers, an unlimited number of Moneris transactions (a major debit/credit card processor in Canada), and an unlimited number of transfers to other BMO accounts.

CIBC (Canadian Imperial Commercial Bank).

• The Canadian Imperial Commercial Bank manages more than 1,000 branches and serves 11 million customers and accounts.
• Income: $16.2 billion
• The corporate account at CIBC makes a lot of financial options available to you and allows you to choose the one that suits your structure best.
• Small businesses, for example, can select a basic operating account with an affordable monthly fee on a pay-for-what-you-use basis.
• Clients can also see transaction reports in CIBC Cash Management Online, assign financial transactions to individuals within the business, and obtain an unlimited number of convenient CIBC bank cards for small businesses linked to a corporate account at no additional cost. 

Canada’s banking system allows non-residents to open corporate accounts with local banks and receive some of the best banking services on the continent. 

Contact our experts for assistance in registering an LP in Ontario and choosing a bank in the Canadian banking system.

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