Your guide to comparing high-yield business savings accounts

Given all the benefits of having a business savings account, it’s understandable why so many business owners have taken advantage of these accounts to store and grow their money.

Popular business savings accounts used by business owners

Savings account name	Interest rate range	Minimum Balance	Maximum Balance	Fees
CIBC Business Investment Growth Account	0.7 – 1.2%	N/A	N/A	$0 per month Transactions: Credits are $1.00 per self-service, $1.25 per full-service (via teller, either in-branch or by phone) and $5.00 for each debit. Deposits are $0.22 per cheque and up to $2.50 for cash or coin. $2.00 for withdrawals at non-CIBC ATMs in Canada.
TD Business Savings Account	0.45% – 0.95%	N/A	N/A	$0 per month Transactions: Deposits and credits are $1.00 each and $0.22 per cheque. Withdrawals and debits are $5.00 each. Monthly coin and cash deposits are $2.50 per $1000.
RBC Basic Business Savings Account	0.45% – 0.95%	$0	N/A	$0 per month Transactions: 2 free debits and cheques, $3.50 afterwards. 999 free credits and deposits per month ($1.00 each thereafter). Item deposits are $1.00 each, while cash deposits are $10.00 per $1,000.
Scotiabank Right Size Savings for Business	0.2% – 0.25%	$10,000 to start earning interest (you can open an account with any balance, but you won’t earn interest until you reach the minimum balance)	$2,000,000	$6 minimum monthly fee for 4 transactions, and tiered pricing for transactions after that (the following 1-15 transactions are $1.25 each, 16-50 are $1.15 each and 51+ are $1.00 each) Transactions: Unlimited, free self-service transfers. Cash and coin deposits are $2.50 per $1,000 and $2.25 per $100, respectively. Cheque deposits are $0.22 each. Credits are $1.25 each. Debits, including ABM withdrawal and bill payments, are $5 each.
Tangerine Business Savings Account	0.75% – 1.25%	$0	N/A	$0 per month No other business banking fees
HSBC Business Savings Account	0.05% – 0.2%	$0	N/A	$0 per month Transactions: 3 free credits and debits, and $1.00 after. Deposits are $2.50 per $1,000 cash, $2.50 per $100 coin and $0.20 per cheque. free withdrawals from HSBC Canada ATMs and $1.50 using other Canadian ATMs.

What is a business savings account?

A business savings account is just like a personal savings account, allowing you to store your money and earn interest over time. When you’ve saved up enough working capital that you have more than you need to access regularly, you can safely grow over time it with interest until a large purchase comes up. Unlike many other investments, like mutual funds and GICs, you have more flexibility to withdraw from a business savings account without incurring large penalties or having to wait for your withdrawal request to be processed.

To entice your business, many banks offer business savings accounts with tiered interest rates, in which the interest rate increases as the balance in the account increases. The bigger your business’s savings, the more you earn.

What are the benefits and drawbacks of a business savings account?

If you’re deciding whether or not to open a business savings account, consider the benefits and drawbacks listed below.

How do I compare the best business savings accounts?

Look for a savings account that meets your business’s financial goals. Most banks reward businesses with preferred interest rates on all business accounts, but you may need to focus on high-yield accounts at other banks. You also may be able to get a better interest rate by getting a Guaranteed Investment Certificates (GICs) with your bank. These are designed to lock away your money for a fixed term, after which, you get it back with interest.

To get the most out of a business savings account, compare similar factors across each of your options including:

• Fees. If you’re a smaller business, you may be on the hook for monthly maintenance fees, though many banks waive these fees if you pick up other bank accounts or products.
• Transaction limits. Savings accounts come with transaction limits to prevent frequent withdrawals and promote the growth of your money. You will typically have to pay a penalty when you go over this limit – fees can range from $2.50 – $5.00 or more per transaction. Know your bank’s policies so you won’t be caught off guard by fees you didn’t budget for.
• Interest rates. With so many banks competing for your business, you might find higher introductory rates applying to your savings 6 months or more after opening your account. Consider some banks (like Tangerine and EQ Bank) who operate strictly online, so they tend to pass on those savings to you through high interest rates.
• Accessibility. Many online banks offer higher interest rates than you’ll find at your local bank because of the lack of overhead costs. You won’t have the convenience of a neighborhood branch, but an extensive ABM network and linked account with your local bank could be worth the savings anyway.
• Minimum balance. How much you’ll need to keep in your account can range from a nothing to tens of thousands of dollars, with higher rates applying to higher balances.
• Maximum balance. Some banks only let you grow up to a certain point. One reason for this is for banks to be able to afford the interest rate and range of services that come with their business savings accounts. Business savings accounts with maximum limits are better for small and medium-sized businesses who likely won’t max out their savings. If you run a large business, you’ll want to find a business savings account with a bank that can support your funds.

How am I taxed on my business savings account?

The interest you earn on a business savings account is considered taxable income. If you earn more than $50 in interest on your account, you’ll receive a T5 tax slip from your bank to file with your annual taxes.

Who is responsible for my business’s Visa credit card debt?

This depends on the liability option you selected when applying for the credit card. Company liability means that the company assumes liability for all transactions on the card, while individual liability means that one nominated person (for example a sole owner or a business employee) is responsible for paying off the debt on the card. Joint and several liability is suitable for partnerships and sees all partners accept joint and several liability for any debt on the card.

What’s the best bank account for regularly depositing cheques?

Because no two businesses are alike in their specific usage of cheques, you won’t find a bank account designed particularly for cheque deposits. However, accounts come with varying fees for handling cheques and other paper instruments, so you should compare these fees to determine which account will work best for you. If you deposit a lot of cheques, look for an account that charges low or no fees for deposits so that you don’t lose an increasing proportion of money just because business starts to boom.

Bottom line

Your business may be ready to set aside some of its hard-earned cash into an account that will grow moreso than if it simply sat in an everyday chequing account. Reliable rates mean steady passive income, and most accounts offer the protection of the CDIC for up to $100,000.

To take full advantage of these high-interest savings accounts, look for low fees and accessibility that meets your business’s demands both today and in the future.

Frequently asked questions

• Are all business savings accounts high-yield?

  No, not all business savings accounts offer high yields. Different business savings accounts meet the needs of different businesses, but paying a high interest rate certainly makes a business account more competitive. Making sure the account you choose will help grow your capital and accommodate your specific needs is an important consideration.

• I have multiple employees who need to access my business savings. Is this possible with a high-interest business savings account?

  Yes. Look for a business account allows you to designate access for specific employees. Note that, as the account holder, you’re still responsible for the account and your employee’s actions, so make sure you only grant access to people you trust.

• Do I need good credit to apply for a business savings account?

  Not necessarily. Usually, your credit score is often not required, or is unimportant, when determining whether you can open a business savings account. The most important factor is actually whether you meet the bank’s stated eligibility requirements for opening a particular business savings account.

  These requirements may include a minimum business income, a minimum deposit and proof that you own a legitimate, registered business. Bank policies can vary, however, so you’ll need to check with your bank to know for sure whether your credit score is a factor.

• Can I use a high-interest business savings account for personal savings?

  Although owners of sole proprietorships report their business finances on their personal tax returns, business and personal bank activity must be kept separate. The Government of Canada requires sole proprietorships to process cheques using a bank account in their business’s name.

  The CRA is much more likely to flag you and require an audit if you mix up your personal finances with your business finances.

  Additionally, if you do ever get audited or need to track your financial activity for any reason, having all your business finances separate and in one place will make it a lot easier to find what you’re looking for. If you want to avoid a surprise audit and the headache trying to sift through your bank activity to find information specifically pertaining to your business, you should keep your personal financial activity away from your business savings account.

• Do I get instant access to funds with my business savings account?

  Generally, yes. Whether for personal or business use, savings accounts are very liquid and accessible, though watch out for limits on the number of times you can withdraw funds from your account in any given month.