Which Canadian bank is best for small business savings accounts?
I recently went searching for a savings account in Canada that paid a decent interest rate on a business account. While I wasn’t too impressed by many of the offerings available, there are a few of them worth looking at.
A business savings account makes sense when your business has some cash you do not need for everyday transactions, but you want to have access to it on short notice.
Read on to see my top picks for the best business high-interest savings accounts in Canada.
Table of Contents
What is a Business Savings Account?
A business savings account is opened in the name of a business (sole proprietor, partnership or corporation) and operates very much like a personal savings account.
To open one, the bank will ask you for details about your business including the:
- Business name registration, partnership registration or certificate of incorporation
- Business address
- Addresses, date of birth and SIN of the principal officers
- Business tax ID
Business savings accounts pay interest on your deposits and they are protected by the Canada Deposit Insurance Corporation (CDIC).
Unlike investments in mutual funds, ETFs, and stocks, money put in a savings account is unlikely to lose face value due to fluctuations in the financial or stock markets.
When opening a business savings account, you should look out for:
- Monthly fees: There should be no monthly account fee.
- High-interest rate: Find an account that pays a competitive interest rate.
- Transaction fees: Choose an account that offers some free transactions e.g. deposits, transfers and withdrawals.
- No minimum balance: You want to earn interest on every dollar.
Top Business Savings Account Rates in Canada
Here are some of the best business savings accounts for earning interest in Canada.
1. Tangerine Business Savings Account
- Rate: 0.25% to 0.50%
- Minimum balance: None
- Maximum balance: None
- Fees: $0 monthly account fee; other fees may apply
Tangerine is Canada’s most popular online bank.
Their business savings account offers a tiered interest rate as follows:
- $0 – $99,999: 0.25%
- $100,000 – $499,999: 0.45%
- $500,000 or more: 0.50%
The interest rate is calculated daily and paid out every month.
One requirement for opening a Tangerine business savings account is that your business must have a chequing account at another financial institution.
Tangerine also offers a business US$ savings account that pays a 0.10% interest rate. Learn about their personal savings account.
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2. Manulife Business Savings Account
- Rate: 0.45%
- Minimum balance: N/A
- Maximum balance: N/A
- Fees: $0 monthly account fee; other fees may apply
Manulife’s Business Advantage Account pays 0.45% on every dollar in your account. The interest rate is calculated daily and paid monthly.
Their business account offers free deposits and transfers from other financial institutions. Mobile cheques, Interac e-Transfer deposits, and mail-in cheques are also free.
These fees may apply:
- Bill payment: $1
- Sending an Interac e-Transfer: $1
- Cheques: $1.50
You can also deposit your U.S. funds in their US$ Business Advantage Account and earn a 0.20% interest rate.
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3. ICICI Bank Business Savings Account
- Rate: 0.40%
- Minimum balance: N/A
- Maximum balance: N/A
- Fees: $0 monthly fee; other fees may apply
ICICI Bank offers a 0.40% interest rate on their no-minimum, no-monthly-fee, business savings account. The interest rate is calculated daily and paid monthly.
Transfers between bank accounts and bill payments are free, however, in-branch withdrawals will cost you $5 per transaction.
ICICI Bank also offers a US Dollar Business Savings Account that pays a 0.25% interest rate.
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4. Wealthsimple Business Cash Savings Account
- Rate: 0.10%
- Minimum balance: None
- Maximum balance: None
- Fees: $0 monthly account fee; other fees may apply
A Wealthsimple Cash for Business account is easy to open and offers:
- No monthly account balance
- Interest is calculated daily and paid monthly
You can use your Wealthsimple account to manage both your personal and business accounts in one place and can access all your accounts via their mobile app.
Wealthsimple also offers corporate investment accounts with very low management fees, compared to traditional mutual funds.
I use Wealthsimple and Tangerine for my business’ savings account.
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5. Scotiabank Business Savings Account
- Rate: 0.20% to 0.35%
- Minimum balance: $10,000
- Maximum balance: $2,000,000
- Fees: $0 monthly account fee; other fees may apply
Scotiabank’s Right Size Savings for Business account offers a tiered interest rate of up to 0.35%. The minimum account balance to start calculating interest is $10,000.
Rates are as follows:
- $10,000 – $99,999: 0.2%
- $100,000 – $199,999: 0.25%
- $200,000 -$999,999: 0.30%
- $1-$2 million: 0.35%
Note that this account charges a fee per transaction as follows: 1-15 transactions ($1.25 each); 16-50 transactions ($1.15 each); and 51+ transactions ($1.00 each).
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6. HSBC Business Savings Account
- Rate: Up to 0.50%
- Minimum balance: None
- Maximum balance: $10 million
- Fees: $0 monthly account fee; other fees may apply
HSBC’s Small Business Savings Account offers a tiered interest rate on deposits up to 0.50%.
Rates are as follows:
- between $0.00 – $99,999.99: 0.20%
- between $100,000.00 – $499,999.99: 0.25%
- between $500,000.00 – $1,499,999.99: 0.35%
- between $1,500,000.00 – $4,999,999.99: 0.40%
- between $5,000,000.00 – $9,999,999.99: 0.50%
There is no minimum balance. While three free debits and two credits are included in the plan, you should be aware of the following applicable fees:
- $0.20 per cheque deposit
- $2.50 per $1,000 per month for cash or coin deposits
- $5 per transaction per additional debit
- $1 per transaction per additional credit
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You can also check TD, BMO, and RBC’s business savings account to see what they offer compared to the ones listed here.
Benefits of a Business Savings Account
A business savings account can help your company manage its cash flows, increase profit, and weather emergencies.
1. You earn interest on your surplus cash instead of leaving it to sit idle in a chequing account. When you need the money, you can easily access it without penalty.
2. Mixing personal and business finances can land you in trouble and wreck your “limited liability” status. A business savings account separates your assets from that of your company.
3. You can save for future business goals, expansion plans, equipment, and other purchases.
4. Business accounts help you build your company’s credit profile. This makes it easy for you to access loans and business financing when needed.
5. Risk-free investing: savings accounts are generally low to no-risk in Canada. CDIC protects your deposits up to $100,000 per bank and for some provincially-regulated credit unions, your deposits are insured 100% regardless of the amount.
Related posts
- Top Business Credit Cards in Canada
- The Best US Dollar Accounts in Canada
- 21 Best Personal Finance Apps To Save Money
- Best Banks in Canada
- Best Bank Accounts for Seniors
Bottomline
The interest income earned on your business savings account is included in your bottom line at the end of the year.
If you are looking for the best rates possible, look at what the non-traditional financial institutions and online banks are offering and compare it with that of the big banks.
Also, read the small print to ensure that you are comfortable with limits on transactions and any associated fees.
info is incorrect for wealthsimple, rate is 0.10%
@dharanee: Thanks for bringing the updated rates to my attention.
Excellent information for the author, disgustingly low rates from our pathetic Canadian banking sector.
I guess it’s easier to steal from your captive audience than charge foreign clients market rates.