This post is for entrepreneurs that are REALLY just starting out. If you start making enough money to support having a business account at a physical bank then go for it because, in the long run, it helps a lot with your business. When starting out, I wanted a way that I could keep personal and business transactions separate. Tax people around me suggested it was a good thing to do. It’s easier to keep track of how much money I used and I could control the money coming in and going out. I felt the best option was using a prepaid credit card because you can keep track of how much you are spending and you can use it for purchases from online vendors.
I started off using my bank’s prepaid credit card because it came with monthly statements and it was somewhat easy to reconcile at the end of the month. What made it difficult was online vendors outside of Canada. The conversion rates differed from the price you see vs. the currency rate. Also, foreign transaction fees were torture.
I then moved on to Koho which I wasn’t purposely trying to use for business but some business purchases were made from it. This card also had some perks. This one is best for personal use because it has a cool feature where you can make a savings goal and it takes money out of your account based on how you set up your goal. If you wanted to keep finances separate while saving up money towards larger business expenses, this card can help with that. I also love how fast money transfers over. Depending on your bank and the time of day, e-transfer is amazing because it is super quick compared to bank transfer. It is also possible to attach this card to PayPal as a bank account which gives this card some bonus points. This card, however, is not great when it comes to foreign transaction fees either.
Currently, I use Mogo only because of the foreign transaction fee. At the moment, they do not charge a fee which is a plus when your vendors are outside of the country. This is a big factor in why I use it. Other than that it’s okay for personal use as it allows you to get your credit score for free, take out loans and mortgages and more recently, bitcoin investments. There is also a goal feature that helps promote spending less. This card doesn’t have e-transfer so you have to plan ahead and decide how much money you will put on it as bank transfers can take up to 5 days.
I also suggest setting a business PayPal account. I find with personal accounts they may not be as secure and/or if there is too much money coming in you can get blocked or suspended. I planned to use this as a temporary ‘bank account’ until flow comes in steadily just to have to avoid paying the monthly charges. I like this way because you can easily transfer the money to your account if needed otherwise I believe you can have the funds stay there for other purchases for your business without touching your own funds.
I have tried looking to see if there were other cards like Koho or Moho but haven’t come across any. How do you keep track of your business transactions? Do you keep them separate? What are your experiences with business finances? Let me know.
Til’ Next Time