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?If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).