Does your small business need a bank account? With all the options out there it’s easy to feel frustrated and overwhelmed.
How do you know which is the best one for your business?
I did much of the legwork for you and narrowed down the best business bank accounts based on business volume and online options.
Now, it’s up to you to find the one that best fits your plans and enhances your business growth.
Is It a Good Idea to Use a Personal Bank Account for Business?
Pros of Business Bank Account
When you’re just starting out, it might seem easier to just run all your business transactions through your personal account.
However, keeping a separate business account for all your income and expenses is better for year-end accounting gives your business a more professional look, and provides you with security in the event of audits or pending lawsuits.
In addition to those reasons, forming a separate business account and growing a relationship with your bank is helpful when it comes time for financing needs, whether for equipment loans, lines of credit, or plans to expand.
If you want your business incorporated, it’s required to maintain a separate account. Also, while you might not be thinking about it currently when it comes time to sell your business, a separate account is a must.
Potential buyers will no doubt want to examine financial statements, bank statements, and other documents relevant to the health of the business.
Cons of Business Bank Accounts
On the flip side of that, there are cons to business accounts. The main one being the extra fees. Business account fees are typically much higher than personal ones, especially if your business has lots of monthly transactions.
Most banks that offer business accounts also place limits on the number of transactions you can have each month. If you don’t read the fine print and know the ins and outs of your account, you could be paying through the nose.
Another con to business accounts is that they really don’t earn much interest. While online banks typically pay more in interest income than traditional banks, it’s usually not as high as personal savings accounts.
While there are pros and cons to business accounts, the pros far outweigh any of the cons. It’s so important to keep a separate account for the health of your business and your own sanity.
Best Business Bank Accounts in Canada
Now that you know you need a business account, choosing the best one to fit your needs is the next problem. Whether you’re looking for an online or brick-and-mortar bank, there are pros and cons to each. Here are the top business accounts to consider and reasons why they’re best, starting with online options.
1. Wise (formerly Transferwise Business)
Why it’s a good choice: No monthly fees and cheap transfers. Wise also links up with Quickbooks keeping your books and banking info up to date.
How to open an account: Open an account online in minutes and claim a fee-free transfer.
If your business does work throughout the world, the Wise Business account can save you money. It offers low-fee transfers, and account holders can receive and hold 55 different currencies – a major plus if you’re a player in the global market.
I’ve been using Wise Business to pay people in five different countries, and also to send money overseas to my international bank accounts. As a digital nomad who works and travels around the world, Wise Business is a must-have for my business operations.
In addition, you can send payments to over 80 countries and connect various currencies to your business debit Mastercard.
Wise has an easy invoicing system that lets you make one-time, recurring or batch payments. Another huge plus is the ability to link up accounting software like Quickbooks and FreeAgent to keep your books continuously up to date.
Why it’s a good choice: No transaction fees, no monthly minimum and higher than normal interests rates.
How to open an account: It just takes a few minutes to open an account online.
Motusbank doesn’t have a separate designation for business chequing and savings accounts, but sole proprietors can still use one of these online-only accounts. The chequing account comes with no monthly account fees, unlimited debit purchases and bill payments, and free unlimited Interac e-Transfers.
Their no-fee chequing account offers interest rates higher than those seen at regular brick and mortar institutions. And just because it’s an online bank, don’t think you’ll have trouble accessing your money.
There are over 43,000 surcharge-free ATMs available to use throughout North America, courtesy of the EXCHANGE Network.
Why it’s a good choice: High-interest rate and no fees
How to open an account: Sign up online in less than 10 minutes.
Tangerine offers personal chequing accounts and savings accounts for businesses. If you’re looking to grow your money, a Tangerine Business Savings Account offers interest rates higher than traditional banks. It’s also perfect to use in combination with a chequing account at another financial institution.
The Business Savings Account has no debit or deposit fees, no minimum balances or service charges. An added bonus is that the online bank also offers a U.S. Dollar Savings Account for customers looking to grow their U.S. funds.
4. Alterna Business Account
Why it’s a good choice: Alterna is one of the few online-only banks that offer a business-specific chequing account.
How to open an account: Check out their website and apply online in only 10-15 minutes.
Alterna’s Small Business eChequing Account requires no monthly fee as long you maintain a $3,000 minimum balance. There are unlimited debit and credit transactions as well as unlimited incoming Interac e-Transfers.
You have access to 3,300 ATMs via Canada’s EXCHANGE Network, and deposits are insured up to the max allowed by the Canada Deposit Insurance Corporation (CDIC).
In addition to their chequing account, Alterna also offers small business loans and payment processing. Customers that already have a business chequing account are more apt to get these additional services through a bank their already comfortable with.
Traditional banks can often offer customer service that far outweighs that of an online bank. Small business owners might be more apt to go with a brick-and-mortar bank in case problems arise or simply because a local bank might have more to offer.
Either way, after careful consideration, here’s a list of the top traditional banks based on business volume.
5. RBC Digital Choice Business Account
Why it’s a good choice: Great for small businesses that have most transactions online.
How to open an account: Apply online and complete the process by visiting a local branch.
If your business has simple banking needs, most of which you can do online, this account is a good choice. There’s a $5 monthly fee for unlimited electronic debit and credit transactions, as well as no minimum balance requirement.
There are fees charged for non-electronic transactions like:
- $2.50 for paper debit and credit transactions
- $5 for every $1,000 deposited at a local branch
- $2.25 for every $1,000 ATM deposit.
This account also offers unlimited Moneris deposits, meaning you can accept payments however your customer wants to pay you.
6. TD Basic Business Plan
Why it’s a good choice: A cost-effective and simple way to manage small business transactions.
How to open an account: Most businesses can start an application online. However, multiple-owner businesses need to visit a local branch to complete the process.
For just $5 a month, you can get a business banking account that includes five transactions and five free deposits. After the first five, it costs $1.25 per transaction and $.22 per deposit.
This type of account is geared towards those just starting out and without tons of monthly transactions. You’ll also have access to TD’s mobile banking app. It’s easy to use and makes it simple to keep up with your account no matter where you are.
7. Scotiabank Basic Business Account
Why it’s a good choice: It’s one of the largest banks in Canada, meaning lots of local branches and ATMs scattered throughout the country.
How to open an account: Open an account online in about 20 minutes.
This business account does have a fee ($10.95) unless you have a bank balance of more than $8,000, then the fee is waived. An added perk is that the account is available in both U.S. or Canadian dollars, a convenient feature for sure.
There is one free transaction allowed for every $1,500 in the account. Each additional transaction gets charged on a pay-as-you-use scale.
Scotiabank offers overdraft protection, along with access to digital banking. Submit payments, EFTs, and more.
8. BMO Business Builder 1
Why it’s a good choice: A great value for a moderate-sized business.
How to open an account: Setup an appointment at a local branch.
If your business is slightly larger than the past three choices, the BMO Business Builder account is a solid way to get some bang for your buck. The account comes with a $22.50 monthly fee but doesn’t require a minimum balance and allows 35 transactions a month.
As for deposits, the account allows 25 items a month and $2,500 cash. The account comes with access to BMO’s online platform, which provides additional features like advanced cash management services and online payments.
BMO Business Builder allows two free Interac e-Transfer transactions per month, along with unlimited Moneris transactions.
Many businesses need a bank account that can handle more volume than just a few transactions. However, those high-volume transactions are going to cost you. Here are examples of bank accounts for bigger businesses.
9. RBC Ultimate Business Account
Why it’s a good choice: Great for large businesses with lots of transactions.
How to open an account: Sign up online and receive your bank account number in minutes.
This all-inclusive package features unlimited electronic debit and credits, as well as unlimited outgoing Interac eTransfer transactions. There are also 25,000 in cash deposits and 100 paper transactions allowed each month. All of this comes with a fee of $100 per month.
While there is no required minimum balance, the monthly fee is waived when you keep a $75,000 minimum daily balance.
This account is the perfect hybrid solution for businesses that use both paper and electronic means. With unlimited transactions, there’s no need to worry about watching limits and going over.
10. CIBC Unlimited Business Operating Account
Why it’s a good choice: Offers unlimited transactions – a huge deal for larger businesses.
How to open an account: Apply online and take an application and principal owners of the business to a local branch to complete the process.
With unlimited transactions, including Interac eTransfers, the $65 monthly fee seems like a bargain compared to the lower-priced business accounts and their small transaction limits.
The deposit package for this account includes $15,000 in cash, $1,000 in coins, and 100 cheques. Customers can get the monthly fee waived if they keep a minimum daily balance of $45,000.
11. TD Unlimited Business Plan
Why it’s a good choice: Unlimited transactions. Plus, setup fees are waived up to $500 for any Small Business Banking term loans.
How to open an account: Start online, but some businesses need to complete the application process in one of the branches.
For $125 per month, businesses can get an account with unlimited transactions and deposits. If you keep a monthly minimum balance of $65,000, you can get a rebate on the monthly fee.
Included in the monthly fee are cash deposits of $25,000. Anything over that comes with an additional charge of $2.50 per $1,000 deposit.
Opening a TD Unlimited account qualified you for rebates on other services, like the TD Business Visa Card, the Business Travel Visa Card, and credit and cash management services.
The account offers free Interac e-Transfer transactions, and the monthly fee is waived for TD Merchant services.
12. Scotiabank Account Unlimited
Why it’s a good choice: Like the other accounts, this one features unlimited transactions as well as other perks like ScotiaConnect Digital Banking.
How to open an account: Apply online in only 20 minutes.
The Unlimited plan has a monthly fee of $120 but is waived with a minimum balance of $75,000. In addition to unlimited transactions and deposits, the account features cash deposits of $30,000 per month.
With ScotiaConnect Digital Banking, a complementary service, you can manage your business activity, pay employees, file business taxes and receive EFTs.
Scotiabank also offers credit cards and financing options for businesses. If you already have a business account opened, you might find a better rate when you’re looking to expand your growing business.
Opening a business account doesn’t take much time and effort. In fact, it’s so easy most banks let you fill out an application online. Other times, depending on your business setup, you might have to visit a local branch to complete the process.
Either way, there are certain documents you need to keep handy whether you’re applying online or in person. Here’s what you should know.
Most applications, either for an online or brick and mortar banks will ask for the following information:
- Personal info – Name, address, birthdate, phone number, and email.
- Business info – The business name, address, how long it’s been in operation, its business registration number, basic financial information, and a brief summary about it.
As the person opening the account, you need two forms of identification, at least one that is a photo ID. Proof of residence might be required as well, so try and bring some type of bill with the business address on it.
Additional documents are necessary, depending on your business type.
- Bring two forms of identification and any business licenses required.
- Legal paperwork for your partnership
- Photo ID and government paperwork for identity verification
- The registered trade name paperwork
- Articles of incorporation
- The business number for tax purposes
- Any business licenses needed
- Two forms of identification
- Certificates of Existence and Compliance
With 90% of the banking market controlled by five banks, Canada has a very centralized and stable banking industry, which is why many businesses are eager to open accounts there.
Here are some other reasons Canada is seeing an uptick in bank account openings.
- No residency requirements
- Low-cost USD payment processing
- Deposit insurance through Canadian Deposit Insurance Corporation (CDIC)
- Remote account available
There are plenty of banking options available to your business, but the devil is in the details. It’s important to skim all the features and figure out how they can fit into your business.
You don’t want to pay high monthly fees if you don’t have many transactions – there are lots of other options available to save you money and keep your business on track.
The bottom line is to make sure you do your homework and know what each bank offers. From there, it’s just a simple process of nixing the ones that don’t fit your business. If you’re looking for other banking options, check out these top online banks.