Best business bank accounts for sole proprietorships
Learn what to look for when choosing an account as a sole proprietor in Canada
A sole proprietorship is a business that is owned by one person. It’s a simple business structure used by over 2.6 million Canadians, and if you’re a sole proprietor, you’re responsible for every aspect of running your business.
One of the most important decisions you’ll have to make is choosing the right business bank account for your needs. To help you decide, we’ve put together this list of the best business bank accounts for sole proprietorships.
Best business bank accounts in Canada for sole proprietorships
- Best overall business bank account in Canada for sole proprietors: RBC Digital Choice Business Account
- Best multi-currency business account for sole proprietors: Wise Business
- Best business account in Canada for new sole proprietorships: RBC Flex Choice Business Account
- Best free business bank account for sole proprietors: BMO eBusiness Plan
- Best savings account for sole proprietors: Tangerine Business Savings Account
- Best basic business bank account for sole proprietors: TD Basic Business Plan
- Best premium business bank account for sole proprietors: CIBC Unlimited Business Operating Account
- Best low-volume business bank account for sole proprietors: BMO Business Builder 1 Chequing Account
- Best high-volume business bank account for sole proprietors: RBC Ultimate Business Account
- Best US dollar business bank account for sole proprietors: Tangerine Business US Dollar Savings Account
Do sole proprietors need a separate business bank account?
If you run your sole proprietorship under a business name, you’ll need to open a business bank account. But if you run your business under your own name, there’s no legal requirement to open a business account — you can choose to use your personal bank account for business transactions if you wish.
But while it’s not mandatory for sole proprietors to have a business bank account separate from their personal account, there are plenty of reasons why you should.
What are the benefits of having a business bank account as a sole proprietor?
Here’s why it makes sense to open a business bank account as a sole proprietor:
- Easy money management. A business bank account provides a central hub where you can manage all of your business transactions, track income and expenses, and monitor cash flow.
- Keep business expenses separate. Opening a business bank account lets you keep your business transactions separate from your personal transactions. This makes it easier to stay on top of your income and outgoing payments, and also saves time when you need to do your taxes.
- Boost credibility. Invoicing clients from your personal bank account makes your business appear a little amateurish. Using a business bank account looks a whole lot more professional and will improve your credibility.
- Simpler tax reporting. Using a business bank account helps you stay on top of your bookkeeping. It’s easier to keep track of your income for tax reporting purposes, plus keep a record of any expenses you can claim as tax deductions.
- Build a relationship. Opening a business bank account is also an important part of building a relationship with your bank. Not only will this help you develop your business’ income and credit history, it’ll also help when you want to access business credit cards, loans and lines of credit from the bank in the future.
What should I look for when comparing business accounts as a sole proprietor?
Consider the following factors when searching for the best business bank account:
Monthly fee
Most business bank accounts in Canada come with a monthly fee. The more transactions you need per month, the higher the annual fee will generally be. However, there are some no-fee business bank accounts available, so it’s worth shopping around to see what’s available.
Supported transactions
If you only have minimal banking needs, you’ll most likely be able to get by with an account that supports a small number of monthly transactions. But if you need to make frequent deposits, withdrawals and transfers, you may need an account that supports unlimited monthly transactions.
It’s also important to check the types of transactions the account supports. For example, some business bank accounts allow unlimited electronic transactions but may charge a fee each time you deposit cash or perform an in-branch transaction.
Other fees
Aside from the monthly fee, there are several other fees that could potentially apply to your business account, such as:
- Out-of-network ATM withdrawal fees
- Interac e-Transfer fees
- Cheque deposit fees
- Cash deposit fees
- Foreign transaction fees
- Exchange rate markups and currency conversion fees
Check the fine print for details of all fees that apply.
Online and mobile banking
With more and more banking done digitally, it’s important that your bank offers user-friendly online and mobile banking portals. Check app store reviews and reviews on sites like Trustpilot to see what other business owners have to say about their online and mobile banking platforms.
ATM/branch network
If you regularly need to withdraw cash from ATMs, check the size of the bank’s ATM network so you can avoid fees for using out-of-network ATMs. And if you prefer face-to-face banking, check whether the bank has convenient locations near you.
CDIC protection
Make sure the financial institution you open your account with is a member of the Canada Deposit Insurance Corporation (CDIC). This means up to $100,000 you deposit will be insured in the event that your bank fails.
Multi-currency support
If your business operates internationally, a multi-currency business account can be a very useful tool. Look for an account that supports the local currencies in the countries where you do business, but remember to check what transaction fees apply and the account provider’s exchange rate markup when you convert currencies.
Business resources
Many Canadian banks offer additional tools and resources to help business owners like you. For example, you may get access to online educational webinars and courses or a specialist business adviser.
Discounts and perks
Opening a business account may also give you access to other discounts from the same financial institution. For example, you may be entitled to a waived annual fee on a business credit card or discounts on products from partner providers.
Customer support
It’s also a good idea to check how you can access customer support if you have a problem with your account. Check whether you can get in touch via live chat, phone and email, and find out during which hours the support team is available.
What are the types of business bank accounts to consider as a sole proprietor?
- Business chequing account. A chequing account is used for your everyday business banking transactions. You can use it to receive payments from customers, pay your suppliers and make business purchases using a linked debit card. It also includes reporting and money management tools to help you keep track of your expenses and cash flow plus meet your tax reporting obligations.
- Business savings account. A savings account pays a high rate of interest on the money you deposit. So if you have spare funds you don’t need for the day-to-day running of your business, you can put them in a savings account and boost your bottom line. However, many business savings accounts only support a limited number of transactions.
- Business multi-currency account. A multi-currency account lets you send, receive, hold and spend money in two or more currencies. For example, as well as holding CAD, you may also be able to hold USD, GBP and EUR. This allows you to save money on currency conversion costs, pay your overseas suppliers in their own currency and receive payments from customers in the countries where your business operates.
Frequently asked questions
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