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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What is 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. 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.
Business chequing accounts vs savings accounts vs day-to-day accounts
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
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:
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 small business banking accounts typically offer between 5 and 25 free transactions and deposits per month. Premium accounts will usually offer 75+ transactions and deposits (or unlimited transactions in many cases).
Additional transaction fees. You may have to pay between $1 and $1.50 for every additional transaction you make on your small business 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 accounts
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:
Fees and transactions. Most small business savings accounts come with no monthly fees.
Transaction limits. There are often limits on the amount of transactions you can make each month, with fees charged on each transaction you make above this limit.
Interest rates. Most big banks offer standard interest rates that range from around 0.50% to 2% for business savings accounts. But you may be able to get a higher rate if you shop around, consider online banks, or meet a minimum deposit requirement.
Business day-to-day money account
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:
Fees. Fees for these digital-only accounts can range, starting at $0 per month.
Transactions. Basic small business digital-only banking accounts typically offer a set number of transactions and deposits for free per month.
Additional transaction fees. Online-only small business accounts tend to offer quite a few additional services, such as multi-currency payments and deposits, accounting integration, as well as corporate cards. To confirm fees, consider what services you require.
Maximum cash deposits. Most online-only small business accounts have no minimum or maximum cash deposit requirements.
Compare low or no-fee business bank accounts
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Small business banking fees
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.
Other fees
The monthly fee isn’t the only cost you need to consider. Other small business bank account fees to watch out for include:
Additional transaction fees. If there’s a limit on the amount of transactions you can perform each month, you’ll be charged a fee for each transaction above your monthly limit.
Branch transaction fees. Some small business bank accounts charge a fee for each transaction you carry out at a branch.
Cheque and cash deposit fees. A fee may apply when you deposit cheques or cash into your small business account.
ATM fees. Most accounts charge a fee if you make a withdrawal from an ATM outside of your bank’s network.
e-Transfer fees. Some banks charge a fee for sending Interac e-Transfers.
Paper statement fees. You’ll need to pay an extra charge if you order a paper copy of your account statement.
Chequebook fees. If you need to order an additional chequebook for your account, a fee may apply.
How to choose the best small business account
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:
Transaction limits. Check how many transactions you can perform each month without incurring extra fees. Remember to check the types of transactions included in your monthly limit — for example, while an account may offer unlimited online transactions, there may be restrictions on how many cheque or cash deposits you can make each month.
Fees. Most business chequing accounts come with a monthly fee. However, some banks will waive this fee if you meet a minimum monthly balance requirement. You’ll also need to read the fine print for details of any other fees that may apply.
Online and mobile banking. Will you be able to perform all your essential banking transactions via online banking? It’s also a good idea to read some customer reviews of the bank’s mobile app to make sure it’s user-friendly.
Branch and ATM access. If you need to perform in-branch transactions on a regular basis, look for a bank with convenient locations nearby. It’s also important to consider the size of each bank’s ATM network so you can easily make withdrawals when needed.
Interest rates. If you’re opening a savings account, compare interest rates to help you boost your business balance quickly.
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.
CDIC protection. Make sure the bank you choose is a CDIC member so that deposits of up to $100,000 will be covered if the bank fails.
Small business resources. Check whether the bank offers access to any other resources to help you grow your business. These can include educational articles and videos, dedicated business advisers, and access to specialized services (such as marketing or HR solutions) from partner companies.
Other business accounts. If you want to keep all your business banking with one financial institution, it’s also worth checking what other business banking products a bank offers. These can include business credit cards and loans.
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.
Which banks offer free business banking?
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:
BMO eBusiness Plan. This BMO business account has no monthly fee and no minimum balance requirement, and it supports unlimited Moneris and electronic transactions.
Loop.Loop offers business multi-currency accounts that allow you to hold funds in CAD, USD, EUR and GBP. There’s no monthly fee on a basic plan, and you can send payments in over 35 currencies.
Vault. Vault offers business foreign currency accounts so you can hold funds in CAD, USD, GBP and EUR. There’s no monthly fee and you get the mid-market rate when you exchange currencies, while you can also earn cash back on your spending.
Wise.Wise for business offers an international business account that lets you hold nine different currencies. There’s no monthly fee, and you can send funds to over 70 countries.
Waived monthly fee when you maintain a minimum balance
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.
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, including:
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 to 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.
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, a partnership or a corporation.
Prepare the documents needed to open a small business bank account (outlined below).
Submit your application.
Documents needed to open a small business bank account
Business registration papers. You’ll need to provide your business registration papers to show that you own a registered business in Canada.
Proof of ID. You will need to prove your identity to open a small business bank account online or in-person. Provide your passport, driver’s licence or other government-issued photo ID.
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.
Check with your bank for a list of all the documentation you’ll need to provide before you apply.
Other financial products for small 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 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.
Bottom line
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.
Small business bank accounts FAQs
The most important type of small business account is a business chequing account. This type of account can be used to manage your day-to-day banking transactions, such as paying suppliers, receiving payments from customers and making business purchases.
Some small business bank accounts come with no monthly fees while others charge up to $150 per month. The amount you pay will typically depend on how many transactions or deposits you need to make as well as what additional perks you want on your account.
It's always recommended to keep business and personal expenses separate for tax purposes. This makes it easier to figure out which transactions you made for your business. For example, if you had a business lunch, you might not remember to write it off at the end of the year as a business expense if you paid for it on your personal account.
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. GICs typically come with no monthly fees, but you may need to make a minimum deposit of $500 or more to open one.
Yes, you should be able to access merchant services and process card payments on some business bank accounts. Check in with the bank you're interested in applying with to make sure that they offer this service.
The best small business banking provider in Canada will depend on your banking needs. You'll need to consider how many transactions you need to perform each month, whether you do most of your banking in person or online, and how much you're willing to pay in monthly fees. It's also worth taking into account the other business banking product a bank offers, such as business credit cards and lines of credit, before deciding whether it's the best small business bank for you.
CIBC offers a choice of four business chequing accounts. These range from the CIBC Basic Business Operating Account, which has a $6 monthly fee and lets you pay for the transactions you use, to the unlimited transactions offered by the CIBC Unlimited Business Operating Account. Other options include a not–for-profit chequing account, a US dollar account, an agricultural investment account and a business savings account.
Yes. Scotiabank offers chequing accounts to suit the banking needs of a wide range of businesses. Compare accounts to find one that allows you to perform all your essential banking transactions each month for the lowest fee.
Like all major banks in Canada, RBC offers a range of chequing accounts to suit the needs of different businesses. These range from the low-fee Digital Choice Business Account for businesses that do most of their banking digitally, to the RBC Ultimate Business Account that supports unlimited electronic debit and credit transactions.
Some small business bank accounts come with no monthly fees while others charge up to $150 per month. The amount you pay will typically depend on how many transactions or deposits you need to make as well as what additional perks you want on your account.
You can easily open a small business bank account online or in-person at a branch. You'll just need to provide some personal and business information to get started.
Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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