Opening The Right Business Accounts for your Medical Practice

Kristen Campbell
March 12, 2020

Once you begin operating your new medical practice, it can be tough to remember to take care of administrative details like setting up new bank accounts and making sure you have the right money allocated for the right tasks.

By taking care of these details before you set up shop, you can choose the best business accounts for your new medical practice, save money, and get yourself ready for any business needs as they come up.

Here are some of the bank accounts you need to get started:

Main Operating Account

This will be the main bank account you use for your medical practice’s needs, including expenses, payments from customers or insurers, accounts payable, and accounts receivable.

For many businesses this is the only account they will use – so it’s important to choose wisely! There are many things to consider when choosing a bank, including the way you financed your operations, transaction fees, interest rates, and convenience to your location. For small businesses, you may be able to pay lower transaction fees with a small business package. However, if you’re starting a large corporate practice, it might be wise to check in with your bank first – there may be certain accounts that will save you on higher volume transactions. In some cases banks may even have special offers that are very specific to doctors, that include large discounts and lower rates, like RBC’s healthcare advantage plan.

Remember that this is also the account you will write any cheques from, so it’s a good idea to benchmark how many cheques you will need and check out the different packages from your bank. Business accounts also come with features that enable different people within the organization to have different access levels, giving you privacy as an owner as well as flexibility to turn control of funds over to your staff.

Payroll Account

The second main account you may want to consider for your business is a payroll account. The payroll account is the same as the regular bank account – it is a business account through a chosen bank with certain fees on transactions. The payroll account exists so that you can keep track of what you pay your employees and makes accounting for your payroll easier. If you do choose a bank account for your payroll, make sure to pick one with low transaction fees, since you will likely be moving money in and out of it every pay period.

With your payroll clearing account, you also want to ensure that you have software or administrative staff in place. After all, your employees are the core of your business, and you want to make sure you – and them! – get paid.

EFT Account

If you receive electronic funds transfers from customers, it may be convenient for you to have an account for receiving and depositing them. This can come in handy, as EFT transfers from the bank are usually reconciled automatically, whereas cheques will have to be reconciled on the monthly bank reconciliation. Having an EFT account in place for funds transfers will streamline the process of accepting funds for your medical practice and make it easier for your accountant at the end of the month.

Accounts like the EFT account can get automatically moved into your regular bank account once the fees are deposited so you can have a better idea of how much operating income you have available – this does mean more transactions though, so make sure you are on board with your bank’s fees.

AR Account

Another account that is worth considering for your medical practice is an account for your accounts receivable. Similar to an EFT account, this account allows you to keep funds from patients or insurers separate from any other payments that you might receive in the course of your medical practice. This is important, as you want to be able to clearly see the inflows and outflows of money from your business.

Having an accounts receivable account not only makes accounting easier but also means it’s easier to keep track of your main sources of income. Through an AR account, you should be able to see how concentrated your income is from particular sources – if you’re getting a large percentage of your income from a certain insurer, it’s in your best interest to keep on top of your collections from them! Since you won’t be keeping funds in here for long, it’s also a good idea to keep this money in a bank account that allows for a lot of transactions, or as a section of your main bank account.

Project Related Bank Accounts

As a new medical practice, you might have projects on the go that require investment or ongoing maintenance, like the purchase of new equipment, renovations, training, or office remodeling. Having separate bank accounts for each one of these projects makes it easier for your accountant, and you, to see how much each one of these projects is really costing you. Having a separate bank account for a remodeling project, for example, can show you whether the project is going over budget or losing money.

Credit Card Accounts

As a new business owner, you and your staff can take advantage of business expenses that might not have been possible if you were working for a larger organization. With this comes business related credit cards, which all need to be paid on time. Having a credit card spending account can help you to separate funds for your expense payments, making it easier to see where money is coming and going. This is also convenient as a safety procedure – your ability to monitor credit card expenses from your employees allows you, as the owner of the bank account, to see more clearly what is being spent – and whether or not it’s legitimate.

US Funds Account

Many businesses either purchase or sell equipment from American retailers. In medical practices especially, purchases of large equipment or special tools from American manufacturers might run into the thousands. In this case, a small change in the exchange rate can mean a big change in your cost. To combat this, many businesses choose to hold US funds in a separate account when interest rates are favorable and purchase this equipment using these funds, which cuts down on the cost of your purchases later on.

Alternatively, you may receive payments in US dollars from patients who are from out of town or who use a US insurer. In this case, having a US funds account allows you to accept their money in its own currency and exchange it later.

GST Remittance

As a small business, you will need to remit your GST/HST payments to the government on a periodic basis. With each patient transaction, there will be a portion of GST/HST that must be paid, as well as with the sales of any additional equipment or services. Keeping these funds in a GST/HST remittance account allows you to keep careful tabs on everything that you need to spend – and saves you any surprises come tax time.

Taxes

Now that you’re a new business owner, your medical practice is going to generate a tax bill both provincially and federally. It’s important to work with your accountant so you can set up the right amount of funds for any future tax payments. Not keeping tabs on your taxes can cost you big time, so it’s best to work with a professional. A great accountant can help you to set aside the right amount so your bills don’t come as a shock. 

It’s also a good idea to find out about any small business, medical practice, or environmental tax incentives that are available to you. This can mean funds coming in to your practice for a specific reason, and you will want to keep these funds separate – either in a tax account or in a special projects account – so that they can be earmarked for the right purpose.

Emergency Spending

Another important account for a new medical practice to have is an emergency spending account. Although there are many ways to fund your medical practice, like loans and lines of credit, it’s also a good idea to keep savings to cover any cash shortfalls over the month.  This can also keep your balance sheet in good shape, so you are prepared to meet any loan covenants put in place by your lenders. According to an article by Due, it’s best to set up between five and twelve months of business expenses.

Keeping a balance in your emergency savings account is an asset on your balance sheet, and can be invested to help your money grow. Choosing a bank account with a high interest rate and low fees is the best option for your emergency spending account. It’s important to keep this account separate from your own personal emergency spending account, as it will allow you more flexibility if there is any seasonality or changes in your business from season to season.


If you’re not sure which bank accounts to open based on your current situation, ask your financial advisor or accountant for specific advice.

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