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Your guide to comparing small business bank accounts
Your business needs the right financial plan for the best chance of success.
Use your small business bank account to track your daily expenses and keep on top of day-to-day operations.
What’s a small business bank account?
A small business bank account is used to manage your business expenses and to keep them separate from your personal transactions. 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 want minimal business perks.
You can use a small business bank account to pay bills, purchase new assets, manage your tax receipts or accept payments from customers. 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.
How to compare small business bank accounts
There are a number of factors to consider when picking the right small business bank account for your needs.
- Fees. Most business accounts have monthly fees that are only waived if you meet certain deposit or transaction requirements each month. These fees can range from $5 to $150 per month, depending on how many deposits and transactions you make.
- Withdrawal limits. Some accounts offer an unlimited number of transactions while others will cap your transactions at a certain number and charge you a fee if you go over this amount. Look for an account that will let you make as many transactions as you need without charging extra fees.
- Extra perks. You may qualify for special benefits such as free overdraft protection, point-of-sale (POS) services, business credit cards or special savings products when you sign up for a small business bank account. Find the account that offers the best mix of benefits you’ll use.
- Customer service. Some banks have a better reputation for customer service than others. You should make sure you pick a bank that has positive customer reviews, especially for its business services. Otherwise, it might make sense to go with a bank you’ve already had a good experience with.
- Mobile app. Some banks offer more developed mobile banking apps than others. You may want to look up customer reviews for banking apps online before you sign up, especially if you’re going to go with an online business bank account such as Tangerine.
- Account integrations. Many banks will offer integrated systems that let you manage your payroll services or POS systems from your business bank account. Your bank should also be able to integrate with your taxes so it’s easier to manage your deductions.
Types of business accounts to consider
Business chequing account
Business chequing accounts help you track your day-to-day operating expenses. They let you make deposits and withdrawals at ATMs and in-person. You can also use these accounts to link up with your POS system to handle customer payments in some cases. Many are also linked to business credit cards and other business financing products such as lines of credit and loans.
HSBC Unlimited Chequing
RBC All Inclusive Premium Operating Account Package
CIBC Advanced Business Operating Account
Features of small business chequing accounts
- Fees. Fees for basic chequing accounts can range from $0 to $25 per month. You can pay upwards of $125 per month for an unlimited plan with some banks.
- Transactions. Basic accounts typically offer between 5 and 25 free transactions and deposits per month. Premium accounts will usually offer 50+ transactions and deposits (or unlimited transactions in some cases).
- Additional transaction fees. You may have to pay between $1 and $1.50 for every additional transaction you make on your account (and between $0.20 and $1.25 for deposits).
- Maximum cash deposits. You could be limited in how much cash you can deposit each month. Some accounts will cap you out at $5,000 while others may go up to $25,000 or $50,000. A handful of accounts come with no maximum deposit limits.
Business savings account
A business savings account can be a good option if you want your money to accrue interest. It provides your business with a place to store liquid assets in order to save up for a big purchase or set an emergency fund aside. A business savings account may require a minimum deposit amount, though it depends on the bank.
Tangerine Business Savings Account
Scotiabank Business Investment Account
Features of small business savings accounts
- Fees. Many small business savings accounts come with no monthly fees, even with the big banks.
- Interest rates. Most big banks offer interest rates that range from 0.10% to 0.50% for business savings accounts. You’ll usually get the higher end of this rate (or more) if you sign up with an online bank such as Tangerine.
- Transactions. Most savings accounts won’t allow you to make regular deposits or withdrawals. That said, you’ll usually be able to transfer money into your savings account for no additional fee.
- Additional transaction fees. You may have to pay around $0.50 to $1 to make deposits into your savings account and as much as $3 to $5 for every withdrawal that you make.
Community and Not-for-Profit Accounts
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.
RBC Community and Not-for-Profit Account
Scotia Community Account Plan
Features of community and not-for-profit accounts
- Fees. Fees for community and not-for-profit accounts are usually very low. They range from $0 to $10 per month with many of Canada’s big banks.
- Transactions. Most community and not-for-profit accounts only offer a handful of withdrawals (typically 5-10 per month max). They often offer a higher number of deposits, ranging from 25 to 50 on average.
- Additional transaction fees. You’ll have to pay around $0.50 to $1 to make additional deposits or as much as $1 to $3 for every extra withdrawal that you make above your plan limit.
Business banking accounts with no or low monthly fees
There are several trusted banks and financial institutions across Canada that offer $0 business bank accounts (or accounts with a very low monthly fee). The features of these accounts may be limited and might be more suitable for small businesses or those with a small number of deposits and withdrawals each month.
BMO eBusiness Plan
Features of small business accounts with no or low monthly fees
- Fees. Fees for basic accounts range from $0 to $25 per month.
- Transactions. No or low-fee accounts typically offer between 5 and 50 free transactions and deposits per month.
- Additional transaction fees. You’ll usually pay between $1 and $1.50 for every additional transaction you make on your account (and between $0.20 and $1.25 for deposits).
- Maximum cash deposits. You may be limited in how much cash you can deposit each month. Many accounts will cap you out at $3,000 to $5,000 per month.
Business guaranteed investment certificates (GICs)
While not a bank account, a business guaranteed investment certificate (GIC) allows you to put aside money for a fixed amount of time with a fixed amount of interest. It provides a guaranteed return on your investment and can be useful for long-term savings, but you’ll usually have to pay a penalty if you need to withdraw money early.
TD Canadian Banking & Utilities GIC
Scotiabank Cashable GIC
Features of business GICs
- Fees. GICs typically come with no monthly fees, but you may need to make a minimum deposit of $500 or more to open one.
- Interest rates. Rates can range from 0.50% to 3%, depending on which provider you sign up with and which type of GIC you invest in.
- Transactions. You won’t be able to take money out of your GIC unless you sign up for a cashable one. If you need access to your funds early, you’ll usually have to pay a penalty.
How to open a small business bank account
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:
- Fill in an online application for the account of your choice (or visit a branch to sign up if you can’t apply online).
- Supply personal information such as your full name, date of birth, address, phone number and email.
- Input details about your business such as how long it has been operational, what your business registration number is and how much revenue you make annually.
- Indicate whether your business is a sole proprietorship or a corporation.
- Prepare the documents needed to open a small business bank account (outlined below).
Documents needed to open a small business bank account
- Business registration papers. You’ll need to bring your business registration papers to show that you own a registered business in Canada.
- Two pieces of ID. You will almost certainly need to prove your identity to open a small business bank account online or in-person. Bring your passport, driver’s licence or other government-issued photo ID to make sure you’re covered.
- Proof of residence. Be prepared to provide proof of residence such as utility bills or other official documents assigned to your current address in Canada. You may also have to show proof that your business is located in Canada.
- Information on authorized users. You’ll want to indicate which users can have full access to your account and which have limited access. You can also assign rules about what actions each person can take on the account.
Pros and cons of a business bank account
Keep these pros and cons in mind when shopping around for small business accounts:
- Keeps business finances separate. Having a business account makes it easier to file taxes and protects your personal assets in the event of a lawsuit.
- Offers features designed for business owners. Many banks offer perks such as payroll integration, personal access to a business banker and business lines of credit.
- Supports multiple users. Many small business accounts let you give employees full or limited access to your account as needed.
- High fees. More premium accounts can come with fees as high as $125 per month, depending on how many transactions and deposits you want to make.
- Transaction limits. Lower-fee accounts often come with transaction limits, and you’ll have to pay a fee every time you go over this limit each month.
- Cash deposit limits. Some accounts will only allow you to deposit a set amount of money each month (such as $5,000) before you have to pay a penalty.
Other financial products for businesses
Aside from a business bank account, your business may also benefit from other forms of financing. These include the following:
- Business credit cards. Business credit cards are linked to your small business bank account. They can help you earn points for business purchases and keep your business’s expenses separate from your personal expenses.
- Niche accounts. Some banks will offer tailored accounts for certain industries like agriculture or online sales. These can give you access to special perks that are designed for the needs of your particular sector.
- Business loans. If your business plans to expand in the future, you may be able to get a better deal on a business loan by using a bank you already have a business bank account with. Keep in mind that many financial institutions won’t lend to business owners who don’t have a dedicated business account.
A 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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