Business transaction accounts
For most small businesses, a business transaction account is a good place to start. Ideally, before you start making sales and spending money on business expenses, consider opening a business transaction account.
A business transaction account allows you to do all the basic financial tasks you need to operate your business:
- Write and deposit cheques.
- Transfer or receive money electronically.
- Withdraw or deposit money using a business debit card.
- Separate your business and personal transaction accounts.
Many banks also offer mobile apps. View your balance, make transfers, pay bills and set up automatic bill paying, and monitor cash flows from anywhere.
As you research your options, look for a business transaction account with a strong introductory offer and low fees. Some common transaction account and service fees include:
- Maintenance fees. Banks may waive these fees if you meet the minimum balance requirements each month. Many banks make these requirements easy to meet for small businesses.
- Transaction fees. Many banks issue small fees if you go over your monthly transaction allotment. Typically, the transaction allotment is high and difficult to exceed.
- Early termination fees. If you close your account early for any reason, such as closing your business or switching financial institutions, your bank may charge you.
- ATM fees. Most banks allow you to withdraw from network ATMs without fees. Many will charge a flat fee for withdrawing funds from another bank’s ATM.
- Deposit fees. Some banks have limits on how much you can deposit each day, week or month.
When considering a business transaction account, make sure you understand the fees, requirements and restrictions. If you think you’ll have a high number of transaction account transactions each month, look for an account with a high transaction limit. If you plan on withdrawing cash from an ATM frequently, make sure you have network ATMs in your area to avoid unnecessary fees.
Typically, online-only business transaction accounts promise lower fees and more convenience, but there are a few drawbacks. Most don’t allow cash deposits, so it may not be a good fit for a business that handles cash transactions. Additionally, because the account is online-only, you won’t find a physical branch. If you like to bank face to face, online-only accounts may not be the right fit.
Meanwhile, some banks offer free small-business transaction accounts for new and small businesses. If you’re tight on funds, a free account might get your business on its feet. But beware: free accounts may come with tighter restrictions on deposits and transactions. Think about what you need your business transaction account to do before making any decisions based on price.