Small Business Banking Account Comparison
As I mentioned in a list on the steps in setting up a corporation, obtaining a business bank account is a good idea. The reason being is that the customers can pay you via company name instead of personal name. As well, it helps during tax season when business income/expenses are separated from personal income/expenses.
I’ve discovered that most small business bank accounts are expensive. The big banks really try to scrape every penny out of business owners via business products, it’s almost nauseating. Thankfully, I own shares in most of the big banks which helps calm my stomach.
The small business accounts offered by the big banks really vary in terms of cost and features. I went through the lowest cost accounts possible (I don’t like bank fees) and what they offered.
Generally speaking, all the banks offered both a set monthly fee plan where you get so many transactions per month in addition to offering “pay as you go” plans.
As of August 2009:
| - | CIBC | Royal Bank | TD Bank | Scotia Bank | BMO |
| Min Balance for No Fee |
n/a | n/a | $8,000 | $5,000 (paygo only) | $4,000 |
| Flat Fee / Month | $11 / 10 trans | $20 / ~ 20 debit 10 credit 20 deposits | $12 /5 deposits 7 debits | $12 – $16 / 15 trans | $9.50 for 15 trans /month |
| Extra Cheque Dep | $0.16 + $1.25 | $0.20 + $0.95 | $0.18 + $1.00 | $0.18 + $0.85 | $0.18 + $1.00 |
| Extra Cash Dep | $1.80+ $1.25 | $2.15+ $0.95 | $2.15 + $1.00 | $2.25 + $1.00 | $2.15 + $1.00 |
| Pay Go Monthly Fee | $10.00 | $6.00 | $7.95 | $9.00 | $6.00 |
| Cheque Dep | $0.16 + $0.90 | $0.20 + $0.95 | $0.18 + $1.00 | $0.18 + $0.85 | $0.90 |
| Cash Dep | $1.80 + $0.90 | $2.15+ $0.95 | $2.15 + $1.00 | $2.25 + $1.00 | $2.15 |
| Extras | 1 free trans for every $500 in account | Monthly paygo fee is waived if trans fees are greater than $6 | - | 1 free trans for every $1,000 in account | - |
For me, I was looking for something as low cost as possible, even if it meant keeping a relatively high balance.
Looking at the table, it was a no brainer to go with the BMO small business account as it offered free banking if I keep a balance of $4k. In addition, they waive the fee for the first 3 months for new start up businesses.
Do you have a business account? If so, who did you go with?
25 Comments, Comment or Ping
1. Will @ Cheap Date Ideas!
wow, this post really exemplifies the saying, “in order to make money, you need to spend money” – such a stark contrast with personal accounts!
Sep 16th, 2009 @ 10:42 am
2. The Financial Blogger
Banks are literally wealth killer when it comes to commercial banking!
I actually do most of my business through a Paypal account (since it cost way less than doing wires!) and I have a business account at RBC.
I have decided to take a bank account with no package. I think I pay about $1.50 to $2.00 per transaction and I limit them to 4 or 5 per month. You will probably be able to do the same with your site ;-D
Wait until you want financing to grow your business, it’s even worst! Along with paying higher interest rate than personal loans, they also charge an opening and maintaining facility charges ;-D
Sep 16th, 2009 @ 11:19 am
3. bcrmt
My local credit union has/had by far the most supportive basic business start-up package around. I began in 2004, no minimum balance, had no fees for 6 months. Since then, I pay $5 a month for my statement and $0.75 each for the 2 cheques I write. I deposit through the ATM. Thus, a whopping $6.50 a month. If I needed further services, each fee on Vantage One’s schedule was comparable or less than other big bank (please…) or local CU packages. AND I get a free turkey every Christmas!
Sep 16th, 2009 @ 11:55 am
4. Cam Birch
I have my small business account with TD. I switched to it a while ago from ATB (Alberta Treasury Branch). Since switching I have saved so much money it is astonishing.
TD offers free online banking (& phone) with their business accounts which is quite helpful for myself. They also have free business to business money transfers if your customers also bank with TD. Since almost all of my customers do bank with TD I get paid on time with no mailing of cheques or hold times. No need to worry about a customer accidently bouncing a cheque and it has saved me about a dozen bank trips per month.
I also like the business hours for TD bank. Since I like many other small business owners are often busy during “banking hours” I actually can now go and do my banking without having to sacrifice customer service or too much pre-planning. Actually the hours are quite honestly the best part of TD.
I have been quite happy with my experience with TD bank so far.
Sep 16th, 2009 @ 12:59 pm
5. David@DINKS Finance
“My local credit union has/had by far the most supportive basic business start-up package around. I began in 2004, no minimum balance, had no fees for 6 months. Since then, I pay $5 a month for my statement and $0.75 each for the 2 cheques I write. I deposit through the ATM. Thus, a whopping $6.50 a month. If I needed further services, each fee on Vantage One’s schedule was comparable or less than other big bank (please…) or local CU packages. AND I get a free turkey every Christmas!”
Thanks for that comment. I don’t have a business banking account, but I would like to have get one for a few projects I have been working on. So I should definitely look at a local credit union it sounds like?
Sep 16th, 2009 @ 1:03 pm
6. Joon
When I wanted to be able to accept USD credit card and cheque payments through Moneris, Moneris required that I have an account with one of RBC, HSBC or BMO.
Where I cannot use a credit union (to support more of my local economy), I prefer RBC because (a) there seems to be a branch in every neighbourhood I relocate to, and (b) their employees seem very happy (this a criteria I use when determining what businesses to support).
I use RBC’s $6/mo CAD account and also a US one to receive US dollars through. Even though my business is very small ($25,000/yr) *and* I pull everything out every month *and* I look grunge, they treat me very well and have rational, honest conversations with me (not like my credit union).
Minimum monthly balance at any bank does not interest me because I draw all of the money into my personal account, as my wages, every month.
I have been considering HSBC for their apparently even wider global presence, but my happiness at RBC makes me reluctant to switch.
Sep 16th, 2009 @ 1:21 pm
7. Paw Doc
http://www.cibc.com/ca/small-business/banking-for-professionals/professional-edge.html
Rates are significantly different if you are a professional like an Accountant, Dentist, Lawyer, Notary, Optometrist , Osteopath ,Physician ,Podiatrist ,
Surgeon , or Veterinarian (other banks offer Engeneers as well)
CIBC is who I bank with and see the above link but a summary is here:
One low monthly fee of $35 ,Unlimited transactions1 such as withdrawals, deposit transactions, transfers and bill payments
Cash, coin and cheque deposit package2
Unlimited access at CIBC with no additional cost – Access your accounts 24/7 through our network of bank machines plus CIBC Telephone and Online Banking, and INTERAC® direct payment at no additional cost
Free initial cheque order
It may be worth it to research the banks if you are a “professional”
K
Sep 16th, 2009 @ 1:39 pm
8. Sarlock
We have our business accounts through RBC… I’ve dealt with TD before and RBC is, by a mile, a far better bank for business. Fees are only a small part of a business/bank relationship, so be very conscious of this fact. Do they have a business banking teller? When is it manned? Is there always a lineup? Do the tellers know what they’re doing? Nothing worse than walking in to do your business banking and then waiting 20 minutes while some inexperienced teller tries to stumble through a transaction. Time is money.
Sep 16th, 2009 @ 1:58 pm
9. Christine
My business banking is with Scotia – it was a decision made of many parts:
1) Our personal banking is there so I can transfer funds between (dividends) with ease
2) Our accountant is familiar with the commercial banker and it’s amazing how smoothly stuff goes especially at year end/dividend time.
3) We have minimal transactions and the plan supports that (i.e. pretty cheap)
So far so good. If I’ve ever felt overcharged or like I wasn’t made aware of a charge, I told them and they so far have had them reversed.
Sep 16th, 2009 @ 2:11 pm
10. Aluminum Case
I considered getting a business bank account for my small business. Unfortunately I was not willing to carry the balance that they wanted. So in the end I just put all business purchases on my personal bank account or credit card. Tax time would be much easier to have all my business purchases all separated. I guess this is something that I will have to come back to once my business is more established. Thank you for this bank account comparison. It should come in handy when I am ready for a business account.
Sep 16th, 2009 @ 4:46 pm
11. Susan
Hi there,
Also, never ever buy cheques from your bank directly. They soak you for orders. The best pricing I have seen is from http://www.asapcheques.ca where the pricing is as below
Business Voucher (cheque on top, 2 stubs below) Computer Cheques for inkjet and laser printers.
100- $40 | 250- $76 | 500- $100 | 1000- $154 | 2000- $229 | 4000- $379
Sep 16th, 2009 @ 6:03 pm
12. JJ
I use the Caisse Populaire d’Ontario. It requires a monthly $5.00 statement fee and 80 cents per transaction fee. Depending on the month, I pay between $9 to $12.00. There is an initial $10.00 fee to open the account (you are buying membership in the Caisse). They handle either Corporation or Partnership or Sole Proprietors.
I was quite disturbed by the fees of mainline banks.
Sep 16th, 2009 @ 10:21 pm
13. AK
Though I disagree with Sarlock about the Business Banking being better at RBC (we recently switched to TD after endless difficulties with RBC) I think that the most important thing you can do is build a relationship at ONE particular branch.
In my experience, the second I stray from our local branch things always become a little more difficult, whether it be at TD or RBC. We choose to maintain a minimum balance at TD to obtain most of the services we require at no charge, but I would rather pay a few $$ more a month for the extra service we receive once becoming a familiar face/business name to them (our “local” branch is 1 1/2 hours away-and we do most of our transactions via internet/mail.)
Sep 17th, 2009 @ 12:06 am
14. Robert
I have a small consulting business and I use a basic Scotia account, pay as you go. I keep the minimum $5,000 in it and I can usually offset all or 90% of the fees. Last month I paid a total of $1.50 (which is for getting a paper statement, which I prefer).
Why Scotia? Mainly they are close to the office so easy to access. I echo the comments about service and building a relationship. I rarely need help but when I do I do not have that relationship. They always want me to book a time int he middle of the day in a week or more. So now I just walk in on Thursday night (when they are open late) and ask for help. I always get it (after a short lecture about there being no business reps around).
Thanks for the tip about cheaper cheques. I always ask for free cheques or else I move my account. I always get them. And they always throw in a stamp, pre-printed deposit slips, and once a nice cheque binder.
I usually have a flyer or ad for another bank with me. And if possible I transfer in a larger than normal chunk of change from my ING account before I ask! I think they wanted $120 for 250 cheques! Outrageous. Yes, I am shameless. These are BANKS – they have no problem charging me, so I have no problem being foreceful (but nice) in return.
thanks for the tip re: BMO’s account but for the $2 or $3 average I have its not worth the switch (less convenient). But when I need more cheques next year … haha!
Sep 17th, 2009 @ 12:50 am
15. JFG
CIBC just changed all the business accounts.
Pay as you go for $8, unlimited for $35.
Sep 17th, 2009 @ 1:10 am
16. chuck
My business account is at TD because our personal banking account is there as well, though I also hold a business savings account at ING
I find all of the business accounts seem to be oriented towards retailers. My business only does 5-6 transactions a month, so I’m seriously overpaying for my transactions.
Sep 17th, 2009 @ 2:07 am
17. SL
We have Coast Capital Savings CU here in BC. They have a $20 business chequing account, unlimited transactions (I do 100+ transactions a month). They also have a pay as you go account for $0.85 per transaction not including deposits which are free. I’ve been using it for over 2 years and never paid more than the $20 fee and cost of printing cheques.
Sep 17th, 2009 @ 2:25 am
18. JFG
sorry, internet went wonky before I could finnish.
The $35 is Unlimited for transactions, but it also includes $15 000 in bill deposits, etc.
All I can really say, is read the fine print, ask questions because, take it from someone who actually opens account for a living, you will pay for it.
Sep 17th, 2009 @ 9:57 pm
19. ProCU
If you see the trend, you’ll note that credit unions are the way to go. Some even have no fee personal accounts that go well with the very low fee business accounts. If you know about the make up of a credit union, you will know that when you open an account, you become a member with voting rights, all profits go towards your local community and anything remaining goes back to members in the form of dividends, or even rebates on the interest you have paid over the year. A great way to become an owner and supporter of your community.
Sep 18th, 2009 @ 1:59 pm
20. Avi
Have any of you looked into icici bank ? It has unlimited business banking for CAD 15 per month and no hidden fees.
Oct 1st, 2009 @ 10:49 pm
21. Simon
Have you considered HSBC? They have a new Business Account called “Business Direct”. No monthly fee and 20 free transactions (ATM, online, phone banking only). Seem like no min balance as well. OK for my small business with few transactions and can do most with ATM or online banking.
Oct 2nd, 2009 @ 12:55 am
22. Ed Rempel
Hi bcrmt,
We found the best deal with our local credit union as well. We have pay only $5/month for all banking, as long as we keep a minimum $1,000 balance.
Ed
Oct 3rd, 2009 @ 2:34 am
23. tosimon
Hey Simon,
I don’t think the HSBC account “Business Direct” is currently offered in Canada. Please correct me if I’m wrong, but I can’t locate it on the Canadian site.
Oct 8th, 2009 @ 9:16 pm
24. Simon
HSBC is switching my existing business account to “Business Direct” in Nov. It’s something new they are offering and here’s the web info, kinda of hidden now…. maybe more available till next month?!
http://www.hsbc.ca/1/2/upgrade
Oct 8th, 2009 @ 9:38 pm
25. reidun
Thanks, Simon,
I’ve been researching business accounts and that HSBC Business Direct account is exactly what I’m looking for. No monthly fee! 20 free checks deposited each month, 18 cents for each one after that. I deposit right around 20 each month, and if I go over a few it’s still cheap! I’d have to deposit 53 checks to rack up $6 in charges, which will never happen. However the account doesn’t start until Nov. 2, which is only a couple weeks away.
Thanks again for posting that link!
Reidun
Oct 15th, 2009 @ 7:38 pm
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