You make plenty of important decisions when you run a small business, but one of the most crucial is choosing a small business banking account. The best small business accounts make it easy and affordable to perform all your essential day-to-day transactions, leaving you free to focus on running your business.
Keep reading to learn how to find and pick the best bank for your small business operating in Canada or around the world.
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A small business bank account is used to manage your business expenses and to keep them separate from your personal transactions. You can use small business banking to pay bills, purchase new assets, manage your tax receipts or accept payments from customers. And if you open a business savings account, you can use it to earn interest on any unused business funds.
Some business bank accounts come with higher fees than normal bank accounts, but you’ll get more services to compensate. Others come with no or low fees for those who perform a limited number of transactions and want minimal business perks.
When you open a small business account, you may also be able to take advantage of special features such as business overdraft protection, business lines of credit, premium credit cards, merchant services and priority business services when you visit a branch in person.
For a long time, there were only two main types of small business accounts in Canada: Chequing accounts and savings accounts. However, the launch of fintech a little over a decade ago means that financial instutions using up-to-date technology have been able to develop a suite of banking products and services that not only cater to the day-to-day needs of business customers, but also help slash banking fees.
Here is a break down of each type of small business bank account:
Business chequing accounts help you manage your day-to-day operating expenses. They let you make deposits and withdrawals at ATMs and in-person, and you can use your chequing account to pay suppliers and send transfers. Chequing accounts can often also be linked up with your POS system to handle customer payments.
Features of small business chequing accounts include:
A business savings account is a good option if you want your money to accrue interest. It provides your business with a place to store unused funds in order to save up for a big purchase, set an emergency fund aside or just make sure your money is working harder for you. A business savings account may require a minimum deposit amount, though it depends on the bank.
Features of small business savings accounts include:
Often a cross between a chequing and a saving account, these accounts offer business owners a suite of banking products and services. The drawback is that the business owner needs to be comfortable with online-only banking services. Still, for business owners looking for a day-to-day business account that offers multi-currency payments and access to credit, these business online-only bank accounts are a great option.
Features of small business online bank account include:
To make comparing even easier we came up with the Finder Score. Interest rates, account fees and features across 20+ business bank accounts and 15+ lenders are all weighted and scaled to produce a score out of 10. The higher the score the better the account - simple.
Every dollar counts when you run your own business. The last thing you want is to have bank fees chipping away at your bottom line, so it’s important to find a business bank account with minimal fees.
Savings accounts don’t usually have monthly fees. Unfortunately, most business chequing accounts in Canada do charge a monthly fee. On basic accounts with limited transactions, this fee is generally less than $10 a month. If you need an account with unlimited transactions to meet your frequent banking needs, expect to pay significantly more.
In some cases, a bank may waive your monthly account fee if you meet specific requirements — such as keeping your balance above a minimum level or depositing a certain amount each month — so it’s worth shopping around to see what’s available.
The monthly fee isn’t the only cost you need to consider. Other small business bank account fees to watch out for include:
The best small business bank account for you depends on your specific banking needs. Some businesses only need a basic account that supports a relatively small number of transactions per month. Others send and receive funds frequently and need unlimited transactions.
You’ll also need to consider how you bank — do you do the majority of your banking online, or do you regularly perform in-branch banking transactions like making cash deposits?
Take the following factors into account when comparing small business banking accounts:
Unfortunately, not many. If you’re searching for a fee-free business chequing account, your options are few and far between. However, there are a few accounts you might like to consider, such as:
Many banks will waive the monthly fee on certain chequing accounts when you keep your balance above a minimum threshold. In many cases, this minimum requirement is quite high, but there are some business banking accounts that only need you to maintain a low minimum balance to avoid paying a monthly fee.
For example, the $6.50 monthly fee on a Vancity Independent Business Account is waived if you have a minimum monthly balance of $1,500. Alternatively, the $10.95 fee on a Scotiabank Basic Business Account is waived when you have a balance of $8,000 or more.
Banks often offer accounts specifically designed for charitable businesses such as community groups, clubs, churches and athletic leagues. One great perk of these accounts is that they usually come with very affordable fees compared to other business banking products.
Community and not-for-profit accounts are usually meant to serve as everyday chequing accounts and typically come with a modest array of features, including:
You may be able to open a small business bank account online, or you could be required to go into a branch to sign up. Follow these steps to sign up for an account:
Check with your bank for a list of all the documentation you’ll need to provide before you apply.
Aside from a business bank account, your business may also benefit from other forms of financing. These include the following:
A small business bank account can help your business keep track of finances and simplify your business taxes. It can also be integrated with your POS and payroll systems in some cases. Learn more about the different types of small business bank accounts that you can take advantage of, and compare bank accounts to find the best fit for you.
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