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?

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FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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Stefanie
6 years ago

with whatever bank you choose don’t order cheques with your bank……. just ordered 500 cheques for $99 with http://www.chequesplus.com

victoria
7 years ago

I know this is late, but I did this same analysis and wound up with a BC Credit Union (Community Savings Credit Union) as it had the only options with no fees with a min balance. All the others were horrible.

Tech Consultant
7 years ago

HSBC was a great choice while it lasted. Small business accounts closed. Moving to a local credit union or BMO.

http://www.vancouversun.com/business/HSBC+cuts+some+small+business+clients/9289838/story.html

Claudia Francis
8 years ago

Forget trying to deal with HSBC. Their website is not up to date, customer service is lacking and one spends way too much time having their calls re-routed. I don’t have time to run around.

Their business account is not worth all the headache encountered. This bank is possibly a bit too big to care.

Kevin E
8 years ago

As a follow up to my post number 47, HSBC pulled my corporate line of credit from me which I have had for over 15 years. We have a net worth of over million dollars and the LOC was for only $20k. The only debt we have is a small mortgage – we just returned from a 3 year sailing sabbatical so their excuse to me was I didn`t have any income. Guess I wasn`t successful enough before our trip to step out for 3 years and not work… I guess their computer systems don`t work well with my scenario and a human would never step in and review the background of the account.

We will be pulling the 2 corporate accounts and 3 personal accounts and moving to a local credit union. My assigned account manger (some guy sitting in a cubicle who knows where) was completely rude to me and quite frankly I was livid about this. Down with HSBC!!!.

rick
8 years ago

I’m in the process of ditching HSBC. They centralized all their business banking so you can no longer actually talk to a human being face to face (yes I’m old fashioned). I noticed that they were taking $20 per month from my account that was not authorized. When I asked them about it, they wouldn’t even talk to me because the info in their computer was wrong (and I can’t prove who I am by presenting identification to another living human). Good riddance HSBC. Coast Capital sounds interesting

Kevin E
8 years ago

I have been banking with HSBC corporately for over 15 years – I always carry a line of credit on one of my bank accounts – just got the renewal app and was surprised to see that they are now charging $300 each and every year for this service. I have told them I will be moving all our bank accounts if this fee is not rescinded immediately. I’m guessing we will be moving – who cares about the small guy anyway?

Jim S.
8 years ago

After having a HSBC Business Direct account for the past 2 years (and a regular HSBC business account for 4 or 5 years before that) I just got a letter from HSBC notifying me that they were giving me 30 days to close the Business Direct account. No explanations, no reasons !! I’ve never had the account overdrawn (I never write cheques on it), and so I’m absolutely floored at the caprice of them to have closed it.
I realize that HSBC Canada is pulling out of the consumer loans business, but closing a normally-operating business account with no attached loans seems a bit off over the edge, for my money.

Amit
8 years ago

@FrugalTrader: Is there a post in which you can compare the Merchant Services accounts that Small Business owners use?

My choice of using TD for my Business Account is also in part because of 2 reasons tied to the Merchant Services fees. I use a TD machine to accept Credit cards or debit cards from my customers. TD links it seamlessly to the TD Business account and instead of waiting for 3 days to get my money (as is the case if I had used any other Merchant Service account) I get the money the next working day. Also, every time I do an “end of the day” transaction, because I am using TD Merchant Services, it’s not counted as a “transaction” towards my allowed number of transactions by TD, thus keeping my monthly fees down. If I had used any other Merchant Services, each end of the day transaction would have counted towards my monthly allowed transactions and my monthly fees would have been quite high.

It will be good to see a post on a comparison chart for all Merchant Services accounts available in Canada.

GRB
9 years ago

I’ve been banking at HSBC for years and loved them for their highly personalized account management but about two years ago a new regime came in and centralized all small business accounts through web/phone. It used to be that they were looking out for me – now they seem to be looking for anyway possible to stick me with a fee. They are cheap, but there are other considerations (like not bouncing cheques for 25 cents when you have a large personal balance at their bank). All banks seem to go through pendulum swings from customer friendly to customer be screwed and HSBC seems to be at a very low ebb. I have also noticed that employees are much less happy there too.