Best Small Business Bank Account Canada (2021): Complete Guide to the Best Banks & Bank Accounts for Entrepreneurs -

There are so many things to think about when starting a small business that it can seem overwhelming. Focusing on these items takes up the majority of the work day … and the majority of your brain power.

So it’s not surprising that a large number of small business owners don’t give much thought to the process of opening a business banking account. Some people may even choose to ignore this task completely, mixing their small business finances with their personal finances.

Failing to set up a small business banking account can lead to hassles down the road, though. The tax complications created when you don’t keep your personal finances separate from the business finances can haunt your business’ performance for years, creating a bookkeeping nightmare.

Through our guide to the best small business bank accounts, we hope to save you some research time, helping you find just the right bank and account that is ideal for your business.

Personal Vs. Business Bank Accounts: What’s the Difference?

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Let’s discuss the similarities and differences between personal and business types of accounts, ensuring you are receiving the most significant benefits that can help your small business.

Similarities Between Personal and Business Bank Accounts

Safety: Both business bank accounts and personal bank accounts allow you to have a safe place to keep your money, while ensuring you can access it fairly easily without the need to carry cash.
Make Payments: You can write cheques or use a debit card with either type of bank account, ensuring you have a record of every transaction you make, which is especially important for business accounts when tax time rolls around.
Work Online: With online banking and banking apps, you can see your current balance at any time, and you can set up automatic bill payments through a smartphone, web page, or tablet.
Make Deposits: Deposits can be made in person, electronically, or through an app, as well in person, at the majority of banks.

Differences Between Personal and Business Bank Accounts

Higher Fees: Although both business and personal banking accounts may have fees, the business account is probably going to have more restrictions and fees on it than the personal account.
Other Restrictions: Business accounts often have minimum balance requirements and a maximum number of transactions per month, whereas personal accounts probably won’t have these limitations.
Extra Paperwork: Opening a business bank account often requires a few more documents than the typical personal bank account, including information the bank must report to the CRA (Canada Revenue Agency) for tax purposes.

Are Business Bank Accounts Necessary?

At this point, you may be wondering if you actually need a business account. Maybe you are concerned about filling out extra paperwork or paying higher fees than exist on your personal account. (After all, you may think those fees on your personal bank account are high enough already.)

Perhaps you feel like you can just keep really good records and maintain your business finances in a personal bank account that you already have, saving time and fees.

Using One Account

In certain cases, it is possible to operate your business without needing a separate bank account.

For example, for someone who operates a sole proprietorship with minimal business related transactions, maintaining the business finances and personal finances in the same bank account is a possibility.

You just need to make sure that you are keeping good records, so you know exactly what income in the account belongs to the business and what belongs to your personal finances.

Using Separate Accounts

However, if your small business needs to make regular purchases of inventory, owns vehicles or other property that require regular maintenance, or pays employees, it is far easier to have separate accounts.

With a business bank account, you have the option of allowing employees to write cheques or use debit cards using business funds. You certainly would not want to give employees access to your personal bank account, but you can do this safely if you have a separate business account.

We should mention that if you have incorporated your business, you must have a separate business bank account.

Pros and Cons of a Business Bank Account

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When considering whether to open a business banking account, it can be helpful to weigh the pros and cons of using this tool to monitor your business’ finances.

Pros of a Business Account

Enhancing Credibility: Nothing gives your business more credibility than having cheques and a debit card with the business name on it, and a separate business account allows for this. Organizations that are performing transactions with your business will feel more comfortable doing so by sending the money to an account with your business name on it than to a personal account.
No Side Hustle: Those with whom you are doing business will take your business more seriously when you have a separate account, while some may consider your business more of a side hustle or a hobby if you are using your personal account for tracking your business finances.
Easier Accounting: When it’s time to do your taxes or to create a balance sheet for the business, this is a far easier process when you have separate business and personal bank accounts.
Easier Payroll and Purchasing: If you business needs to do things like pay employees or purchase inventory to carry, it is far easier to do these things from a business bank account, rather than trying to keep the purchases straight when using a personal account.
Employee Access: If you need to give employees access to the business account, this is an easy process, as you can allow them to write cheques or use debit cards, all while putting caps on the amounts they can spend per transaction.
Building Credit: With a separate business bank account, you will have an easier time generating a credit score for the business, meaning you may be able to qualify for a reduced interest rate on loans or on other types of financing your business may need.
Building a Relationship: Once you have an established bank relationship for your business, it can become easier to obtain loans, credit cards, or lines of credit that you may need to grow the organization.
Reducing Personal Liability: When your business has its own financial account, this can reduce the amount of personal financial liability you have, should something happen to the business and should you become the subject of a lawsuit. With separate accounts, your personal finances are more likely to receive protection from the courts in a lawsuit against the business.
Less Complex Tax Calculations: The CRA is less likely to question your tax return when you have clearly separate business and personal banking accounts. The expenses and revenue attributed to the business is easier for the CRA to see when it is not comingling with your personal income.
Full Range of Online Services: With a business account, you probably will have access to the same types of convenient e-services, including online and mobile banking, that you would have with a personal account.
Perks: Some banks deliver special features and perks to businesses that open business accounts, such as automatic bill payments, discounts on payroll generation, or access to a personal loan officer who specializes in business loans.

Cons of a Business Account

Fees: A business bank account will carry a higher level of fees than a personal account. However, some banks offer simple business accounts with small fees for those who have a very small number of transactions each month.
Minimum Balance: Some banks require that those with business accounts maintain a minimum balance, which can be a problem for some really small businesses that are just starting out and that may not have a significant amount of income yet. However, most banks have at least one account with no minimum balance requirement.
Limitations: Some banks place a limit on the number of transactions you can have each month, and this sometimes includes both deposits and payments. Depending on the type of business you have, this can be a significant problem, so shop around to find a bank and an account that give you what you need in terms of limitations on transactions. (Typically, excess transactions would then carry individual fees.)
Interest on Balances: Versus a personal chequing or savings account, the interest rate you are likely to earn on a business chequing or savings account will be a bit lower, unless you go with an online-only bank, which tends to offer higher interest rates.
Documentation Required: You typically will need a greater level of documentation to open a business account than with a personal account.
Too Complex: If you are running a sole proprietorship, it may be easier to simply operate the business finances alongside your personal finances, because operating a separate business account may introduce a level of complexity that you do not want.
Works As an Asset: When you have a separate business account, legally, the account becomes a business asset. This means the money in the account technically belongs to the business, not to you personally. Should you need to sell the business, the account would be sold along with the rest of the business’ assets, which you may not like.

How to Open a Business Banking Account in Canada

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Opening a business account with a Canadian bank is not a difficult process, but you do have follow a few steps.

Documentation Required for a Business Bank Account

To open a business account in Canada, you will need a few types of documentation, depending on the type of business you are operating.

Sole Proprietorship: You will need a photo ID, a government issued document to verify identity, and any business licenses required to operate your sole proprietorship for tax purposes.
Partnerships: You will need your registered trade name, the legal paperwork regarding the partnership, a photo ID, and government issued documents to verify identity and for tax purposes.
Corporations: You will need your articles of incorporation, your business number for tax purposes, any business licenses require to operate, IDs for the signing authorities for the corporation, and certificates of existence and compliance.

Limitations on Opening a Business Bank Account

There are very few limitations on who can open a business account with a Canadian bank. In fact, you do not need to be a permanent Canadian resident to open this type of account.

Regulations can be different from bank to bank, though, so always check before starting the process of signing up for an account.

Opening a Business Bank Account Online

Some types of business bank accounts require the account holder to physically visit the bank to sign paperwork and show the required documents. However, this is becoming less common.

For the majority of business bank accounts these days, the account holder can complete the entire process digitally. You may be able to open the account completely online without ever having to set foot inside a branch.

Startup Costs of a Business Bank Account

Some banks will charge you a fee for opening the account, although this is not common.

It is possible that you will have to carry a minimum amount of money in the business bank account, so you will need to have this amount available at the time you open the account.

Finally, you could end up with some costs to obtain the documents that you need to open the account.

Best Brick-and-Mortar Banks in Canada for Small Businesses

Canada’s banking industry has five traditional banks with a national footprint, and these banks control the vast majority of the business market. Here are the small business banking options for each of the five largest banks in Canada:

Bank of Montreal (BMO)

BMO has a number of banking options for businesses, including a few specialty accounts, giving you plenty of choices to find accounts to match your business needs.

BMO’s accounts have a higher monthly fee structure than competitors, but they also allow more transactions than most of the competitors’ options.

With BMO, business customers may change the type of business account they own at any time with no fees associated with the change.

Business account options:

Business Start: which has a monthly fee of $6, allows seven transactions per month, and has no minimum monthly balance required.
Business Builder 1: which has a monthly fee of $22.50, allows 35 transactions per month, and has no minimum monthly balance required.
Business Builder 2: which has a monthly fee of $45, allows 70 transactions per month, and has no minimum monthly balance required.
Business Builder 3: which has a monthly fee of $80 (unless you have a balance of $35,000, upon which BMO waives the fee), allows 120 transactions per month, and has no minimum monthly balance required.
Business Builder 4: which has a monthly fee of $120 (unless you have a balance of $80,000, upon which BMO waives the fee), allows 160 transactions per month, and has no minimum monthly balance required.
Business Premium Rate Savings Account: which has individual transaction fees instead of a monthly fee, and the account pays a slightly higher interest rate than that offered through BMO’s business chequing accounts.

Online banking options:

eBusiness Plan: which is an online-only account with no limit on the number of electronic transactions, no monthly fees, and no minimum balance required.
Many of the business accounts with BMO include free transactions through Moneris, which is a digital payment processing service.
Banking online with some of the accounts listed earlier will allow you to avoid having to pay some of the fees, as some transactions performed online will not count toward the monthly limit.

Bank of Nova Scotia (Scotiabank)

With Scotiabank, multiple business banking accounts are available, giving you a number of options for matching the account’s features to your business needs.

Scotiabank’s fee structures are a little higher than some of its competitors, but Scotiabank does waive fees when you maintain lower monthly balances than what competitors require, which is a nice feature.

Its online banking options are all integrated into its regular business accounts, so Scotiabank does not offer a free online-only account.

Business account options:

Right Size Account: which has a monthly fee of $6, charges fees for each transaction you make per month, and has no minimum monthly balance required.
Basic Business Account: which has a monthly fee of $10.95, (unless you have a balance of $8,000, upon which Scotiabank waives the fee), and charges fees for each transaction you make per month (unless you have at least a $1,500 balance).
Select Account A: which has a monthly fee of $18 (unless you have a balance of $15,000, upon which Scotiabank waives the fee), allows 25 transactions per month, and allows 50 deposits per month.
Select Account B: which has a monthly fee of $35 (unless you have a balance of $30,000, upon which Scotiabank waives the fee), allows 70 transactions per month, and allows 60 deposits per month.
Select Account C: which has a monthly fee of $70 (unless you have a balance of $40,000, upon which Scotiabank waives the fee), allows 125 transactions per month, and allows 85 deposits per month.
Select Account Unlimited: which has a monthly fee of $120 (unless you have a balance of $65,000, upon which Scotiabank waives the fee), and allows unlimited transactions and deposits per month.
Professional Plan Plus: which has a monthly fee of $38, allows 110 transactions per month, and has no minimum balance required.
Business Investment Account: which has individual transaction fees instead of a monthly fee, and the account pays a slightly higher interest rate than that offered through Scotiabank’s business chequing accounts on a balance of $25,000 or more.

Online banking options:

ScotiaConnect: which allows users to view account details, transfer funds, pay bills, pay employees, and send and receive wire transfers in a digital format.
Mobile Banking for Business: which allows users to view balances, view statements, make bill payments, and handle account transfers through a mobile format.

Canadian Imperial Bank of Commerce (CIBC)

At CIBC, you’ll find a variety of business banking account options, giving you a better chance of matching your needs with the requirements of the account.

With CIBC, the monthly fee structure on business accounts is lower than competitors’ fees, but you’ll have stricter limits on the number of transactions you can perform.

CIBC also has quite a few mobile and online banking options for business users, which is helpful.

Business account options:

Basic Business Operating Account: which is an account that has a $6 monthly fee, as well as fees for each individual transaction, and has no minimum balance required.
Everyday Business Operating Account: which is an account with a $20 monthly fee for self-service access or a $25 monthly fee for full-service access (unless you have a balance of $15,000, upon which CIBC waives the fee), and allows 30 transactions per month.
Advanced Business Operating Account: which is an account with a $35 monthly fee (unless you have a balance of $35,000, upon which CIBC waives the fee), and allows 100 transactions per month.
Unlimited Business Operating Account: which is an account with a $65 monthly fee (unless you have a balance of $45,000, upon which CIBC waives the fee), and allows an unlimited number of transactions per month.
Business Investment Growth Account: which has individual transaction fees instead of a monthly fee, has no minimum monthly balance, and the account pays a slightly higher interest rate than that offered through CIBC’s business chequing accounts.

Online banking options:

SmartBanking for Business: which is a tool that can import data about payroll and other accounting information from accounting software you may already be using.
Online Banking for Business: which is an online tool that gives users access to account information, while allowing transfers and bill payment from an easy-to-use interface.
Mobile Banking App: which provides limited control over your business banking accounts from an app you can safely use with a smartphone or tablet.
Many CIBC accounts allow for transactions that don’t count against the limit when you perform e-transfers through Interac.

Royal Bank of Canada (RBC)

Versus brick and mortar bank competitors, RBC keeps things simple for business users, offering only a few account options. Finding something that’s personalized to your business’ needs is a little trickier when there are fewer options, but some people will appreciate the simplicity.

Business account options:

Flexible Account Package: which has a $6 monthly fee, does not require a minimum account balance, and charges individual transaction fees for full-service deposits and transactions (with a discount on the transaction fees for transactions performed in a self-service manner).
All-Inclusive Account Package: which has a $100 monthly fee (unless you have a balance of $75,000, upon which RBC waives the fee), does not require a minimum account balance, and allows up to 100 paper transactions per month.
Basic Business Savings Account: which allows two debit transactions per month, has transaction fees for full-service deposits, has no minimum monthly balance, and the account pays a slightly higher interest rate than that offered through RBC’s business chequing accounts.
Maximize Your Interest Account: which allows two debit transactions per month, has transaction fees for full-service deposits, requires a $100,000 minimum monthly balance to earn interest, and the account pays a slightly higher interest rate than that offered through RBC’s business chequing accounts and though RBC’s Basic Business Savings Account.

Online banking options:

Digital Account Package: which has a $5 monthly fee, allows unlimited electronic transactions per month, and charges individual transaction fees for full-service deposits and transactions.
RBC will allow e-transfer transactions through Interac and deposits through Moneris that do not count against your account transaction limits.

TD Canada Trust (TD)

At TD, you’ll have several business bank accounts from which to choose, helping you precisely track down the features you want. Think about the number of transactions you expect you have each month, and then try to match that number with one of TD’s numerous business accounts.

Business account options:

Basic Business Plan: which is an account with a $5 monthly fee, allows five transactions and five deposits per month, and has no minimum balance required.
Every Day Business Plan A: which is an account with a $19 monthly fee (unless you have a balance of $20,000, upon which TD waives the fee), and allows 20 transactions and 50 deposits per month.
Every Day Business Plan B: which is an account with a $39 monthly fee (unless you have a balance of $35,000, upon which TD waives the fee), and allows 60 transactions and 50 deposits per month.
Every Day Business Plan C: which is an account with a $72 monthly fee (unless you have a balance of $45,000, upon which TD waives the fee), and allows 120 transactions and 50 deposits per month.
Unlimited Business Plan: which is an account with a $125 monthly fee (unless you have a balance of $65,000, upon which TD waives the fee), and allows unlimited transactions and deposits per month.
Business Savings Account: which has transaction fees for deposits and debits, has no minimum monthly balance, and the account pays a slightly higher interest rate than that offered through TD’s business chequing accounts.

Online banking options:

Some accounts allow some e-transfers through Interac that do not count against the limit each month.
TD does not have a specific digital account for businesses, but it does offer online and mobile banking options.

Best Online Banks in Canada for Small Businesses

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If you prefer the idea of using an online-only bank for your small business account, a number of online banks operate in Canada that give you the ability to open an account easily with minimal fees.

However, online banks rarely have specific accounts for businesses, so these types of accounts are better for sole proprietorships than for businesses that operate under a separate name.

Here are the five best online banks for small businesses and sole proprietorships in Canada.

EQ Bank

EQ Bank has a chequing account option, but it does not offer a specific business banking account with features that can compare to the brick and mortar banks, so it is best used for a sole proprietorship or for someone who is operating a small business under his or her own name.

Equitable Bank is the parent company of EQ Bank.

Account options:

Personal Banking: which is an account with no transaction fees for deposits and debits, no bill payment fees, no minimum monthly balance, and the account pays a significantly higher interest rate than that offered through traditional bank chequing accounts. It does have limits on the amount of money you can transfer into and out of the account per day, week, and month, though.

Motusbank

Motusbank offers both chequing and savings accounts that operate completely online. It does not have accounts specifically designated as business accounts, but sole proprietorships can use these efficiently.

Meridian Credit Union is the parent company for Motusbank.

Account options:

Chequing: which is an account with no transaction fees for deposits and debits, no bill payment fees, no minimum monthly balance, unlimited Interac e-transfers, and the account pays a higher interest rate than that offered through traditional bank chequing accounts.
Savings: which is an account with no transaction fees for deposits and debits, no minimum monthly balance, and the account pays a higher interest rate than that offered through traditional bank accounts.

Simplii Financial

With Simplii Financial, you’ll have access to both savings and chequing accounts that operate entirely online. However, the bank does not allow opening accounts in a business name, so it will only work for sole proprietorships operating under the name of the owner.

CIBC is the parent company of Simplii Financial.

Account options:

Chequing: which is an account with no transaction fees for deposits and debits, no bill payment fees, no minimum monthly balance, unlimited Interac e-transfers, and the account pays a higher interest rate than that offered through traditional bank business chequing accounts.
Savings: which is an account with no transaction fees for deposits and debits, no minimum monthly balance, and the account pays a higher interest rate than that offered through traditional bank accounts.

Tangerine Bank

Tangerine Bank has chequing accounts for individuals and savings accounts for both individuals and businesses. Tangerine says its business savings account attempts to serve as a complement to your business chequing account at another financial institution.

The Tangerine chequing account is not a specific business account, so it is best for sole proprietorships.

Among the online banks on our list, Tangerine is probably the closest thing to a brick and mortar bank in terms of the features it offers. Scotiabank is the parent company of Tangerine.

Account options:

Chequing: which is an account with no transaction fees for deposits and debits, no minimum monthly balance, unlimited Interac e-transfers, and the account pays a higher interest rate than that offered through traditional bank business chequing accounts.
Business Savings: which is an account with no transaction fees for deposits and debits, no minimum monthly balance, and the account pays a higher interest rate than that offered through traditional bank accounts.

Wealthsimple

Wealthsimple is more of a robo-advisor for investors than a business bank, but it does provide some of the same benefits of savings accounts, especially for small businesses that carry large account balances and are looking to earn interest off of those balances.

Power Corporation is the primary parent company and owner of Wealthsimple.

Account options:

Invest for Business Basic: which is an account for balances up to $100,000 with no account transfer fees, rebalancing fees, or trading fees, as well as automatic reinvesting of dividends. The account maintenance fee is 0.5%.
Invest for Business Black: which is an account for balances of more than $100,000 with no account transfer fees, rebalancing fees, or trading fees, as well as automatic reinvesting of dividends. The account maintenance fee is 0.4%.

What Is the Best Bank for a Small Business in Canada?

Here are our recommendations for the best small business bank account for a few different types of businesses.

Sole Proprietorship (online): BMO eBusiness Plan or Simplii Financial Chequing
Sole Proprietorship (offline): TD Basic Business Plan or BMO Business Start
Small Business (less than 50 transactions per month): Scotiabank Select Account A or BMO Business Builder 1
Small Business (more than 50 transactions per month): CIBC Unlimited Business Operating Account or Scotiabank Professional Plan Plus

Best Small Business Bank Account Canada (2021): Complete Guide to the Best Banks & Bank Accounts for Entrepreneurs

Personal Vs. Business Bank Accounts: What’s the Difference?

Similarities Between Personal and Business Bank Accounts

Differences Between Personal and Business Bank Accounts