The Best Small Business Bank Accounts in Canada
The Best Bank for Small Business Depends on the Business's Volume & Needs
There didn't use to be much point in looking for the small business bank accounts in Canada; for years, the only difference between business bank accounts and personal ones was that business bank accounts cost a lot more in fees.
But the Cyclopean eyes of Canada's big banks have finally alighted on small business banking and, having decided that small business owners are a worthy market, the banks are actually competing with one another to create business bank accounts that small business owners will find attractive - and that means creating small business accounts with lower bank fees.
Here are the best business bank accounts for Canadian small businesses based on their monthly costs so you can compare and decide which is the best bank for small business.
Business Bank Accounts for Low-Volume Businesses
If you do most or all of your transactions electronically and don't need to write or deposit cheques much, you may be able to use a free business bank account, such as RBC's Small Business eAccount, which has:
- no monthly fee
- unlimited electronic account transactions each month
- no minimum balance required.
However, standard fees apply to all non-electronic transactions:
- a $2.00 charge for every paper debit or cheque
- a $3.50 charge for every paper credit or deposit
- $0.32 for each items deposited
- a $5.00 fee for every $1,000 cash deposited in-branch.
- a $2.50 per $1,000 charge for ATM deposits
Bank of Montreal's offers a similar no monthly fee eBusiness Plan.
So unless your clients are all paying directly through credit, debit or wire transfer, you may be better off springing for a business bank account that does have a monthly fee.
For instance, RBC also offers a Business Essentials $6 Small Business Account:
- the $6.00 fee includes up to 8 transactions per month
- if your transaction fees exceed $6.00 the fees decrease by the number of transactions; for example, if you make 1-10 paper based transactions, the transaction fee is $1.25 each but if you make 11-30, the fee decreases to $1.20 each.
- you can cut down on transaction fees by banking electronically; 1-10 electronic transactions are only $0.75 each.
The business bank account with the lowest monthly fee currently is the TD Basic Business Plan.
- the $5.00 monthly fee includes:five free transactions and five free deposit items per month.
- after the first 5, each transaction is $1.25 and each deposit item is $0.22.
- cash deposits are $2.50 per $1,000.
Scotiabank's Right Size Account for business has:
- a $6 per month minimum fee, which is waived for the first 6 months, or waved altogether if you’re a member of the Canadian Federation of Independent Business (CFIB).
- transaction fees of $1.20 through $0.85 each depending on how many transactions you make each month over the $6 minimum fee
Scotiabank also offers a Basic Business Account Canadian or U.S. dollar account:
- minimum account maintenance fee of $9.95 a month - free if your minimum monthly credit balance is $6,000 or over, however no interest is paid on the account.
- one free transaction for every $1,100 kept in the account
- additional transactions charged on a pay-per-use basis. Each cheque, for instance, costs $1.20, while each item deposited to your account costs $1.00.
- a $6 per month minimum fee
- no minimum balance requirement
- seven free transactions a month
- a $6 per month minimum fee
- no free transactions
- $1.25 fee for each full-service transaction and $1.00 for each self-service transaction.
And If You're Not a Low-Volume Business?
You're going to pay more. Sometimes a lot more. Each bank offers a slate of business account offerings and their charges for what you get are comparable. There are no banking bargains.
Most Canadian banks offer a business account at the $20 monthly fee level which might work for you if you run a small retail business.
The Royal Bank's RBC Business Essentials Fixed-Fee Account is pretty typical of accounts offered. For a monthly business bank account fee of $20.00 you get:
- Up to 20 debits/cheques each month
- Up to 20 credits/deposits each month
- Up to 20 items deposited each month
- Up to $2,500 cash deposited each month
- Monthly fee waiver with a minimum daily balance of $15,000
(They also offer three other Fixed Fee Plans at monthly rates of $35.00, $50.00 and $75.00, each with increasing numbers of transactions per month.)
The best of these accounts is the TD's Every Day Business Account. For $19.00, it gives you 20 transactions, 50 deposit items and up to $5,000 in cash deposits, more than any other of the big banks.
From there, all the banks offer accounts with increasing monthly fees based on the number of monthly transactions.
The CIBC offers an Unlimited Business Operating Account which, as the name suggests, gives you unlimited transactions with a cash, coin and cheque deposit package for a $50.00 monthly fee. Looking at how few monthly transactions are included in most of the more inexpensive business bank accounts and how quickly additional transaction fees stack up, this may well be the most inexpensive option if your business has many monthly transactions.
Small Business Banking Packages
Another thing that complicates the issue of which is the best bank for small business is that some banks offer small business banking packages that bundle banking services.
Scotiabank's "combo" small business banking packages are of particular interest; they offer several business bank accounts that combine a personal and business bank account with other banking services, such as their ScotiaOne Account Plan. Besides the personal chequing and business bank account, the plan includes a business Visa card, a ScotiaCard and electronic banking for business. Fees start at $49.95 per month.
The Best Way to Get a "Free" Business Bank Account
...is to maintain a monthly balance. But the required monthly balance to waive the account maintenance fee is often quite high.
As of time of writing, the account with the lowest required minimum monthly balance is the aforementioned TD Every Day Business Account. You won't have to pay the $19.00 fee on their Every Day A bank account if you maintain a minimum monthly balance of $20,000.
See What Business Bank Accounts Your Credit Union Offers First
There are also a great many Credit Unions operating in different regions in Canada. and you'll want to check with your local Credit Union to see what kinds of business bank accounts it offers. Historically, Credit Unions have had a strong interest in small business banking and your local Credit Union probably offers business banking accounts and services that are very competitive.
The Credit Union I use offers a $6.00 pay-as-you-go Business Chequing Account, a $10.25 Business Package that comes with 15 full-service transactions and four other business account packages with fees ranging from $19.95 through $99.95. Besides the range of packages, I also really like the fact that their transaction fees are lower than the banks in many cases. Check and see; this may be true of the Credit Union in your area too.
Small Business Banking Isn't All About the Fees
The most important feature of small business banking is the relationship you have with your bank or credit union manager, not the cost of your small business bank account, as sooner or later almost all small businesses need a business loan and/or a line of credit. That being said, however, there's no point in spending money every month on small business banking services you’re not using or conversely, paying relatively high small business bank account fees and not getting the small business banking services you need.
Checking your business bank account and comparing it with the information on business bank accounts above could help you find a small business bank account that's a better fit for your small business and save you money.