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The Best Banks for Small Business

By Debt.ca on March 17, 2021 No Comments
Black and white bank lobby

Finding banks for small business operations is essential. Running a small business requires one to open a business account. There are bank services that can help you manage your business finances (as separate from your personal finances) and grow your business.

Nowadays, you can find many banks that offer a wide range of services for small businesses. If you’re a small business owner, choosing the bank that’s right for you can be overwhelming given the many options in front of you.

When picking a small business bank account, you must prioritize convenience, security, and affordability. It’s also essential to pick one that allows you to borrow money through lines of credit (e.g. credit card) or business loans in case you need funding in the future.

Personal and Business Bank Accounts: Similarities and Differences

Small business owners need to learn about the similarities and differences between personal bank accounts and business bank accounts. In this way, they will know why they need a business bank account and its benefits for their respective enterprises.

Similarities

  • Making Payments. With either type of bank account, you can use a debit card or write cheques. As such, there will be a record for all your transactions, which is crucial for your business when preparing your financial statements during the tax season.
  • Keeping Your Money Safe. A personal bank account and a business bank account are the same in terms of keeping your money safe. You won’t also need to carry cash all the time because both accounts are very accessible.
  • Online Services. Viewing your current balance and paying bills are convenient for both personal and business bank accounts. With technology, you now have an online bank that you can access via a mobile app or a web page.
  • Deposit Money. Both types of bank accounts allow you to make cash deposits either electronically or in person.

Differences

  • More Paperwork Requirements. You need to submit more documents when opening a business bank account compared to opening a personal bank account. For instance, you need to provide your tax information as the bank needs to report to the Canada Revenue Agency (CRA).
  • Restrictions. Limitations on the number of transactions per month and minimum balance requirements are two common restrictions of business bank accounts. Such restrictions are typically non-existent on many personal bank accounts.
  • Higher Fees. Business bank accounts usually have higher transaction fees than personal bank accounts.
  • List of the Best Banks for Small Businesses

To help you narrow down your options when looking for small business banking, take note of our list of the best banks for Canadian small businesses.

TD Canada Trust

TD Canada Trust Logo

TD Canada Trust offers several accounts with various features for small business owners. If you’re looking for a business account that suits your expected number of monthly business banking transactions, you can choose one of TD’s account options below.

  • Business Savings Account. No required minimum balance per month, debit and deposit transactions come with fees, and it pays higher interest rates compared to TD’s business chequing accounts.
  • Basic Business Plan. No required minimum balance. It allows five monthly deposits and five monthly transactions and comes with a $5 fee per month.
  • Every Day Business Plan A. A small business bank account that has no monthly fee as long as the account holder has a $20,000 balance. Otherwise, the account holders must pay a $19 monthly fee. The account enables one to make 50 monthly deposits and 20 monthly transactions.
  • Every Day Business Plan B. No monthly fee if the account holder has a $35,000 balance. Otherwise, the account holder must pay a $39 fee per month. The account allows 50 monthly deposits and 60 monthly transactions.
  • Every Day Business Plan C. No monthly fee if the account holder maintains at least a $45,000 balance. Otherwise, the account holder must pay a $72 monthly fee. It allows for 50 monthly deposits and 120 monthly transactions.
  • Unlimited Business Plan. No monthly fee as long as the account holder maintains a $65,000 balance. Otherwise, it requires a $125 monthly fee. The account enables the holder to make unlimited transactions and deposits every month.
  • Online and Electronic Banking:
  • A TD business bank account holder can make e-transfers via Interac without affecting the account’s monthly transaction limits.
  • TD doesn’t offer any particular digital account for small businesses. However, one can avail of its mobile and online banking options.

Royal Bank of Canada (RBC)

Royal Bank Of Canada Logo

Many small business owners prefer RBC over other banks because it makes their transactions simple. However, RBC offers fewer account options than other banks. Here are RBC’s bank account options for small businesses.

  • Basic Business Savings Account. This account pays a higher rate of interest than the bank’s chequing accounts for businesses. No minimum balance per month required, but there are fees for full-service deposits. An account holder can make two monthly debit transactions.
  • All-Inclusive Account Package. No monthly fee if the account holder has a $75,000 balance. Otherwise, the account holder must pay a $100 fee per month. This account allows for 100 monthly paper transactions.
  • Flexible Account Package. No minimum monthly balance required, but there’s a $6 fee every month. Full-service transactions and deposits come with fees.

Online Banking:

  • Digital Account Package: Unlimited monthly electronic transactions every month. Full-service transactions and deposits have fees. The account has a monthly fee of $5.
  • An account holder can make e-transfer deposits via Moneris and e-transfer transactions via Interac without counting against the account’s transaction limits.

Bank of Montreal (BMO)

BMO BANK OF MONTREAL logo

Bank of Montreal offers several business banking accounts, and they come with a higher number of monthly transactions. However, the monthly fees for such accounts are higher compared to accounts from other banks. Here’s BMO’s list of banking accounts for small businesses.

  • Business Savings Account Premium Rate. No monthly fee, but there’s a fee for every single transaction. This account pays a bit higher rate of interest than the bank’s chequing accounts for businesses.
  • Business Start Account. This account doesn’t require a minimum monthly balance, and the holder can make seven transactions every month for only a $6 monthly fee.
  • Business Builder 1 Account. This account doesn’t require a monthly minimum balance, and the holder can make 35 transactions every month for a $22.50 monthly fee.
  • Business Builder 2 Account. For a $45 monthly fee, this account allows 70 monthly transactions. Another benefit is that the holder doesn’t have to maintain a minimum balance per month.
  • Business Builder 3 Account. This account comes with an $80 monthly fee if the holder doesn’t maintain a balance of $35,000. It allows for 120 monthly transactions.
  • Business Builder 4 Account. This account comes with a $120 monthly fee if the holder doesn’t have a balance of $80,000. It allows for 160 monthly transactions.

Online Banking:

  • eBusiness Plan: An online account with unlimited electronic transactions, no required minimum balance, and no monthly fees.
  • Many of BMO’s business accounts include free transactions via Moneris, a fintech company that specializes in electronic and online transactions.
  • Online banking with some of the accounts mentioned above comes without the typical fees. Also, the online transactions won’t count toward the account’s monthly limit.

Canadian Imperial Bank of Commerce (CIBC)

Canadian Imperial Bank of Commerce logo

 

This bank offers lower monthly fees than its competitors, but the restrictions on the number of transactions are more stringent. CIBC also offers online and mobile banking options for small business owners.

  • Everyday Business Account. This account comes with no monthly fees if the holder has a $15,000 balance. Otherwise, the holder has to pay a $25 fee per month for full-service access and a $20 fee per month for self-service access. It allows for 30 monthly transactions.
  • Basic Business Operating Account. This account comes with a monthly fee of $6 and charges for individual transactions.
  • Unlimited Business Operating Account. No monthly fees as long as the holder has a $45,000 balance. Otherwise, the holder has to pay the $65 monthly fee. As its name suggests, this account allows for unlimited monthly transactions.

Online banking:

  • Online Banking for Business is a tool that allows users to view their accounts online and make e-transfers and bills payment.
  • Smart Banking for Business is a tool that imports payroll data and other accounting data from various accounting software.
  • There’s a CIBC mobile app that gives you access to your CIBC banking accounts. You can download it on your tablet or smartphone.

Takeaway

Many banks today cater to the needs of small businesses. The above banks for small business organizations offer various products and services. They come with a wide range of services including online and electronic banking transactions. Make sure to check out debt.ca if you need more information regarding financial and banking services that help small business owners.

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