The Best Small-Business Bank Accounts in Canada

A small business owner in Canada has a unique set of banking needs. You don’t deposit or complete a high volume of transactions, but a personal account won’t offer you worthwhile benefits. You’re on the hunt for the best small business bank account in Canada. 

You should avoid commingling business and personal funds to prevent confusion. Some business structures also do not allow commingling for regulatory reasons. The need for a second bank account is real. You want to avoid extra paperwork and fees.

All bank accounts incur administrative fees. There are ways to work around them. Some banks waive fees based on minimum account balances. It’s their effort to compete for your business. There are attractive offers for small business owners that scale with their companies. At this point, your revenue is probably limited. Anywhere that you can save on fees is a good deal.

As you browse the available bank account options, keep in mind that the fees shouldn’t make your final decision. It’s one factor. Think about what you’re trying to accomplish. You might be happy as a sole proprietorship. Some companies want to stay small. There are others that plan to grow.

When picking the best small business bank account, consider the fees. Also, consider the potential for growth. The bank that houses your business account can also be your lender and financial partner.  

The following is a list of the best small business bank accounts in Canada to consider.

If you already bank with a particular establishment, you may want to stay with them, especially if they’re on this list. Our list includes:

1. BMO Business Start Bank Account
2. eBusiness Plan
3. Scotiabank Right Size Account for Business
4. CIBC Basic Business Operating Account
5. CIBC Unlimited Business Operating Account
6. RBC Flex Choice Business Account
7. RBC Digital Choice Business Account
8. TD Basic Business Plan
9. TD Everyday Business Account

Factors that Constitute a Best Small Business Account

Banking fees pay the administrative costs of rendering services. A small business usually watches every cent that comes in and out. Budgeting for a \$6 monthly fee is not a slight afterthought. Take into consideration how often you’re going to make a deposit, pay your vendors, and transfer money. Each transaction requires oversight so that it is correctly completed every time.

Canadian banks are aware that small businesses are the heartbeat of the country, so they’ve made adjustments to their business accounts. Thanks to technology, some fees are offset with electronic, mobile, and app services.

Factors that constitute a best small business account are:

• Monthly fee amount
• Number of free transactions allotted per month
• Minimum balance required to keep the account open
• Number of fees waived based on minimum balance requirements
• Online banking options

Customer service also plays a role. If you feel appreciated by your banking representatives, that may outweigh the fees. If they nurture your business and goals, that’s something to keep in mind, too.

Here are our top picks for the best small business accounts in Canada broken down by bank.

Bank of Montreal (BMO)

Founded in 1817, the Bank of Montreal employs over 45,000 employees. In 2019, the Bank saw a revenue of $22.8 billion. Despite its size and multinational operations, BMO provides reliable customer service. They also offer small business bank accounts.

There is no shortage of business banking options. You can pick from six accounts. You’ll find that BMO’s fees are a little higher than other banks. The ability to switch between accounts at any time without a fee is the trade-off.

The BMO Business Start Bank Account ranks among the top inexpensive small business bank accounts.

BMO Business Start Account

This account features:

• No minimum balance
• A monthly fee
• Limited free transactions per month
• Fees for electronic, check, and deposits past the limited free transactions

The BMO Business Start account is a starter. Small business owners who require more free transactions per month can upgrade to the Business Builder 1, 2, or 3. 

The BMO Business Builder 4 account has the highest monthly fee if you maintain a balance below the designated minimum amount. If you maintain the minimum, the bank will waive the maintenance fee. There is no minimum monthly balance to keep the account open. You also receive the most free monthly transactions per month. 

Here’s how the numbers break down:

BMO eBusiness Plan

Another BMO small business account that ranks highly is the eBusiness Plan. This is an online-only account. It features:

• No limits on electronic transactions
• No monthly fees
• No minimum balance requirement

Bank of Nova Scotia (Scotiabank)

Founded in 1832, the Bank of Nova Scotia (Scotiabank) continues to service Canadian banking customers. The multinational banking and financial services company employs just over 100,000 employees. In 2019, it realized revenue of $32.8 billion. The bank is a member of Canada’s Big Five banks. It is the third-largest by bank deposits and market capitalization.

Like BMO, Scotiabank has no shortage of banking offerings for small businesses.

Scotiabank’s Right Size Account for Business is a top-rated and inexpensive option.

Scotiabank Right Size Account for Business

The Right Size Account for Business features:

• A monthly fee
• Limited free transactions per month
• Fees per transaction over the free limited allowed

The Scotiabank Basic Business Account includes a higher monthly maintenance fee. This account waives the fee if you meet the monthly minimum threshold. For every minimum amount increment kept in the account, you receive a free transaction. Every transaction above the free transactions incurs a fee. Small business owners can opt for Canadian or United States dollars.

Here’s how Scotiabank’s small business accounts break down:

The bank also offers online banking features with ScotiaConnect and Mobile Banking for Business. ScotiaConnect includes:

• View account details
• Transfer funds
• Pay bills
• Pay employees
• Wire transfers, send and receive

Mobile Banking for Business includes:

• View balances
• View statements
• Bill payment
• Account transfers

Canadian Imperial Bank of Commerce (CIBC)

The Canadian Imperial Bank of Commerce (CIBC) resulted from a merger between the Canadian Bank of Commerce and the Imperial Bank of Canada in 1961. They were founded in 1867 and 1873, respectively. 

CIBC employs 44,000 employees. In 2019, it was a revenue of $18.6 billion.

The Basic Business Operating Account ranks among the best in the inexpensive category. 

CIBC Basic Business Operating Account

CIBC’s Basic Business Operating Account features:

• A monthly fee
• No free transactions
• A free per transaction

A variety of account options is a benefit that a bank of this size offers. CIBC provides lower fees. Stricter rules on transactions is the trade-off. Here’s how their other small business bank accounts break down:

CIBC also offers online business banking options. Online banking transactions don’t count toward the allotted transaction limit. 

CIBC SmartBanking for Business allows customers to import payroll and relevant accounting data from current software. Online Banking for Business is like most online services. It allows customers to access account information, complete transfers, and pay bills.

The Bank provides a complementary online banking app for further convenience.

CIBC’s Unlimited Business Operating account scores high marks for small business owners who require a high volume of transactions monthly.

CIBC Unlimited Business Operating Account

The CIBC Unlimited Business Operating Account is considered a package account. Clients receive unlimited transactions with cash, coin, and checks. Even though most small businesses run a modest shop, those that require more transactions without the fees can opt for this account.

Royal Bank of Canada (RBC)

Founded in 1864, the Royal Bank of Canada (RBC), the bank remains one of Canada’s big five banks. In 2020, it saw a revenue of $47.2 billion. RBC receives praise for keeping their small business banking accounts simple

Two of RBC’s business bank accounts receive high marks. The Flex Choice Business account and the Digital Choice Business account.

RBC Flex Choice Business Account

The RBC Flex Choice Business Account features:

• A monthly fee
• Unlimited items per deposit
• Electronic deposit fee
• Paper transaction fee
• Deposit fees

RBC Digital Choice Business Account

The RBC Digital Choice Business account is a worthy option for business owners who don’t write or deposit several checks. Its features include:

• A monthly fee
• Unlimited electronic debits and credits
• No minimum balance requirement

Here’s how RBC’s business banking accounts break down:

The RBC Digital Account package includes the monthly fee. Customers enjoy unlimited electronic transactions per month. Charges are assessed to full-service deposits and transactions.

TD Canada Trust (TD)

Founded in 2000, Toronto-Dominion Bank (TD) came together as a result of the merger between Toronto Dominion and Canada Trust. This bank is a small operation that places a focus on small business and commercial banking. The operation includes 1,100 branches and 2,600 ATMs.

The TD Basic Business Plan account scores well with small businesses. So does the TD Everyday Business Account.

TD Basic Business Plan

The TD Basic Business Plan is a good fit for the small business that does not complete several transactions or deposits on a monthly basis.

It features a:

• Monthly fee
• Free limited number of monthly transactions
• Free limited number of monthly deposits
• Fee per transaction and cash deposit after the free ones 

TD Everyday Business Account

A high volume small business benefits from the TD Everyday Business Account. It’s still low cost. It features a:

• Monthly fee
• Free limited number of monthly transactions
• Free limited number of monthly deposits
• High monthly deposit amount

Banking with TD offers several business bank options and perks. From the available accounts, there is at least one that matches your needs.

Here’s how TD Canada Trust’s business banking accounts breakdown:

TD customers receive access to online and mobile banking applications. There is no digital account. 

 What Else Do You Need to Know? 

Now that you know the best small business bank account options in Canada, you are almost ready to go! However, there is some more general information you should keep in mind when setting up an account for your small business. 

Online Banks

Online business banking is catching on. The younger generation of entrepreneurs grew up with these tech tools. Those who would like to bank on the go at any time of the day can rest assured that there are non-brick and mortar options, too. 

Small business accounts offered by Canadian banks have limitations. They’re best for sole proprietorships and small businesses that don’t engage in a high volume of transactions and deposits every month. 

Five online banks to consider are:

• EQ Bank
• Motusbank
• Simplii Financial, a subsidiary of CIBC
• Tangerine Bank, a subsidiary of Scotiabank
• Wealthsimple

Each online bank provides checking and savings accounts. Wealthsimple has a slight investing angle. It’s a convenient choice for small businesses that are interested in earning interest from their accumulated funds.

Bank vs Credit Union

Credit unions provide small business account options, too. Credit unions take deposits, provide loans, and offer savings accounts. They are member-owned, so they operate on a more personal scale. The process to become a credit union member is more strict. Those strict guidelines usually lead to more favourable interest rates on savings and debt.

The Fees

If the fees still gnaw at your wallet, there are several ways to minimize them. In some cases, there are zero to no fees. Meeting the minimum balances is a great way to zero out monthly fees. Bundling financial products at one banking institution can lower fees, too. Knowing the monthly transaction and deposit helps you avoid fees. Simply plan around the limits. 

It’s best to limit the number of cards per account. Too many transactions lead to increased fees. Those who complete several transfers monthly might consider an account that also provides online banking. This avoids transfer fees.

Why Is a Small Business Bank Account Important?

Some business structures protect the business owner’s assets against litigation. In this case, it’s crucial to separate business and personal funds. A separate account does mean more paperwork, especially if you’re a sole proprietorship. In the long run, it’s advantageous.

By having two separate accounts, year-end tax accounting is more organized. Purchases, vehicle payments, and employee payments come from one designated account. If a mathematical error occurs, it’s easier to pinpoint the source.

Difference Between Personal and Business Account

Personal and business bank accounts both store people’s money. They indeed have several similarities, too. Both allow account holders to deposit and keep their funds safe. When you need to make a withdrawal, you can. Making payments directly from the account through checks or a debit card works in the same manner for both accounts.

Online banking is far more common today. The feature is available for both accounts, too. 

The differences between the two accounts are in the fee structure, legal restrictions, and additional paperwork. Simply put, a business banking account requires more maintenance. The fees charged cover the administrative costs of the transactions and deposits. 

Do You Really Need a Business Bank Account?

When you go through all the fee information, you might wonder if you really need a business bank account. A sole proprietorship may not need a business bank account. When a company has more than one employee, vendor, and other business partnerships, it’s essential to keep track of all the money.

Money flows very easily out of a bank account. This is one reason why accounting software is so popular. There must be a way to keep track of deposits, payments, and other transactions. Organizing your company’s financial records and information, even if it’s a small shop, makes tax season easier, too.

Small Business Bank Account Benefits

There are always two sides to every story and two sides to every coin. A small business bank account is no different. It has pros and cons.

The downside of business bank accounts is the fees. To qualify for a fee waiver, you must maintain balances that might be too high for a small business. Transactions are limited per month in most cases. 

To open a business banking account, you must provide extra documentation. Banks must verify that your company exists before granting the account.

In business, there are always trade-offs and compromises. Plenty of trade-offs exist that help you maximize your finances. 

Steps to Open a Small Business Bank Account

Opening a Canadian small business bank account is similar to opening a personal account. To prevent fraud, expect to present additional documentation.

Sole proprietorships must present a government-issued picture ID and business licenses. Partnerships and Corporations must present more information.

Partnerships must present:

• Government-issued picture ID
• Government-issued documents that acknowledge the partnership exists
• Registered trade name documents
• Legal paperwork that acknowledges the partnership

Corporations must present:

• Articles of incorporation
• Tax business number
• Business licenses
• Certificates of existence and compliance
• Government-issued picture ID of each person who will be an authorized user of the account

You must open most small business bank accounts in person at a branch location. Opening a bank account online is gaining traction. In either case, you must still collect proper identification, documents, and signatures.

There are usually no fees attached to opening a small business bank account. As soon as it’s opened, you can make your first deposit. To avoid fees, you should make the minimum deposit.

Best Small Business Bank Account in Canada Conclusion

There is enough variety and competition among Canada’s Big Five banks. This competition leads to an array of small business bank account options, which allows you to pick the account that best suits your needs in the present. Ideally, the bank account and institution will scale with you as your company grows. If you aim to stay small, the account and banking institution will nurture your financial needs.