Best Business Savings Accounts Canada | To Manage Your Finances

November 16, 2021 | Editorial Team

Owning a business can be tough, especially when it comes to managing finances. There are many different ways a business can do so. One of the best ways is to open a business savings account. This will help you track your finances better, and earn more money if you find an account with a good rate of interest.

Best Business Savings Accounts

Let’s take Let’s take a look at five of the best banks and financial institutions that offer a business savings account in Canada. We will take a look at Scotiabank and their subsidiary Tangerine Bank, RBC Royal Bank, Manulife, and ICICI Bank.

1. Scotiabank Business Savings Account

Starting off our list is Scotiabank’s business savings account, the Right Size Savings for Business. This is a great savings account for businesses, as it is cheap to use. There is also good earning potential with the interest rate Scotiabank offers.

This account has no monthly maintenance fee, and self-service transfers are free and unlimited. You don’t want to pay fees to access your own money, and you won’t have to with this account. Similarly, Scotiabank encourages you to save. You can earn higher interest rates the higher your balance is. You want cashback in your pocket, not the banks. If that isn’t enough, here are some more advantages to the Scotiabank business savings account.

Pros

  • You can earn an interest rate of 0.2% if you have between $10,000 and $99,999 in your account. The interest rate increases to 0.65% If you have over $1,000,000.
  • You can withdraw funds anytime for free.
  • Online banking is available.
  • There is no monthly fee to maintain the account.
  • You can pair your business account with your personal account, or your credit card if you want to.
  • Self-service Candian dollar transfers are unlimited and free.

Cons

  • Interest rates are lower than other savings accounts, especially if you have less than $99,000 on deposit.
  • A maximum account balance of $2,000,000 may be an issue for bigger businesses.
  • The minimum balance to receive interest is $10,000.

2. Tangerine Business Savings Account

Next, we’re going to take a look at one of Canada’s favourite online banks (other than EQ Bank), Tangerine. Tangerine is known for offering a great interest rate, and they do not disappoint with this business savings account. You can earn an interest rate of up to 0.55% if you have $500,000 or more in your savings account.

Banking with Tangerine is also beneficial as they have little to no fees. There are no monthly account fees and no minimum balance needed, so you won’t be losing money in an attempt to save it.

You can also pair your Tangerine savings account with your credit cards or other accounts for easy banking. Even though Tangerine is an online bank, there are plenty of pros to utilizing their business accounts.

Pros

  • No maximum or minimum balance.
  • Interest is slightly higher than other business accounts. If you have less than $99,999 you will get an interest rate of 0.3%. Below $499,999 will get an interest rate of 0.5%. Anything above $500,000 will get an interest rate of 0.55%.
  • No monthly account fee to maintain the savings account.
  • Tangerine doesn’t believe in unfair fees, so you can save even more.
  • Tangerine is one of the best online banks (along with EQ Bank) in Canada and is owned by Scotiabank.

Cons

  • You must have a chequing account at another bank to open a business savings account with Tangerine.
  • Not much difference in the interest rate between the second and third-tier.

3. RBC Royal Bank Business Savings Accounts

Our next recommendation is the business savings account from RBC, one of Canada’s big 5 banks. They offer business accounts with competitive interest rates and 24/7 access to your savings.

RBC keeps their business banking simply by offering three main business savings accounts:

  • Basic Business Savings Account

This is recommended for small to mid-sized businesses. There is no minimum monthly fee, and your money is always accessible. RBC offers tiered interest rates, depending on your account balance. You can also easily move your money between your business savings account and your business operating account. You will receive two debit transactions per month. You will receive two free debit transactions per month and unlimited electronic credits or deposits.

  • Maximize Your Interest Account

This account is recommended for commercial-sized businesses that have a minimum of $100,000 to invest. There is no minimum monthly fee, and you can make unlimited deposits and electronic credits. Tiered interest rates start at $100,000 and you can earn 0.2%-0.3% interest.

  • Savings Account for Farmers

This is recommended for those participating in the AgriInvest Program under the Canadian Agricultural Partnership. There is no minimum monthly fee, and you receive matching contributions from the government. You will also receive coverage against agricultural risks. Interest rates are not tiered and are set at 0.7% for all balances.

On RBC’s website, you will be asked to answer some questions using Your Digital Business Advisor Tool. RBC will then recommend the best business savings account for your business needs.  

Let’s take a look at some of the pros and cons of RBC Royal Bank’s business savings accounts.

Pros

  • All accounts have no minimum monthly fee.
  • You can choose an account with no minimum monthly balance requirement.
  • You can tell RBC your banking needs and they can find the best banking solution for you.
  • You can visit an RBC branch or set up your business account online or over the phone.
  • RBC provides CDIC coverage up to $100,000.
  • Convenient banking is available 24/7.
  • You can withdraw your savings at any time.
  • RBC also has a Business Plan Builder. This provides you with a framework for success and access to resources.
  • The RBC Business Cash Flow Tool gives you an analysis of your current cash flow position and advice on how to improve your cash flow.
  • Business savings account customers could also access an RBC’s business loan
  • The RBC Digital Banking Security Guarantee means you are fully protected against any eligible digital transactions that you didn’t make or approve.

Cons

  • Some business savings accounts have fees associated with cash deposits and item deposits. You may also be charged for cheques.
  • Interest rates are lower than some of RBC’s competitors.

4. Manulife Bank Business Advantage Account

The Business Advantage Account from Manulife is a high-interest savings account for small or medium-sized businesses.

Manulife’s business accounts are available to a variety of business types, including:

  • Corporations
  • Partnerships
  • Trusts
  • Estates
  • Associations, Societies and Lodges
  • Community Accounts
  • Condominium Corporations
  • Trade or Labour Unions
  • Charities, Not-For-Profit Organizations, and Unincorporated Charitable Organizations

The Business Advantage Account offers a competitive 0.45% interest rate on savings. There are no monthly fees and no charges to deposit or transfer money.  

You will need to have a primary operating account at another bank in order to use this business savings account. You can then make free transfers between your primary account and this savings account.

For businesses that operate with the US Dollar, Manulife also offers a Business Banking US Dollar Advantage Account. This offers an interest rate of 0.20% with free deposits and transfers. There are also no monthly fees for this account.

To help you decide if Manulife’s Business Advantage Account is the best option for you and your business, take a look at some of the pros and cons below.

Pros

  • You will get free deposits and bank-to-bank transfers between your accounts at other banks in Canada.
  • Online and mobile banking gives you quick and easy access to your savings at any time.
  • There is no minimum deposit requirement.
  • Your savings will be protected by CDIC coverage.
  • This account has very few associated fees. There is no charge for transferring money from another account, direct deposits, mobile cheque deposits, mail-in cheques, and receiving Interac e-Transfers.
  • The interest rate of 0.45% is very competitive.
  • You have multiple options for depositing money in your savings account. This includes direct deposits, money transfers, Interac e-Transfers, and direct deposit cheques.
  • You can pay your Canadian taxes online through Manulife. They offer a tax payment and filling service 24 hours a day. Enrollment is optional, meaning you can complete your taxes an alternative way if you choose.
  • Manulife offers an all-in-one mortgage and banking account for small businesses.
  • Manulife’s online banking is easy to use, allowing you to keep your business finances simple.

Cons

  • You will be charged $1 for every bill payment and Interac e-Transfer and $1.50 for cheques.
  • You may be subject to a maximum hold of 8 business days on your deposits.

5. ICICI Bank Business Savings Account

Our final recommendation is the Business Savings Account from ICICI Bank. This ICICI account is a great place to hold your business’ cash reserves where it can earn interest and help your business generate additional income.

ICICI Bank originated in India and now operates all over the world. ICICI Bank Canada was established in 2003. They now have an asset base of C$6.2 billion. They have become increasingly popular and now offer a huge variety of accounts and financial products.

ICICI doesn’t offer tiered interest rates on its business accounts. Instead, it offers high-interest rates to all customers of:

  • 0.4% on the Canadian Dollar Business Savings Accounts.
  • 0.25% on the US Dollar Business Savings Accounts.

You can open an account online, over the phone or in a branch.

ICICI Bank is a member of both the Canadian Deposit Insurance Corporation (CDIC) and the Canadian Bankers Association (CBA). This ensures its customers have the highest possible protection.

Below is a list of some of the pros and cons of ICICI’s Business Savings Account.

Pros

  • There is no minimum balance requirement.
  • There are no monthly fees associated with this account.
  • You can link your business savings account with up to three business chequing accounts at any bank in Canada.
  • Banking transactions can be done online 24/7 through Corporate Internet Banking.
  • ICICI Bank is a member of the CDIC. This means your deposits will be fully protected, up to $100,000.
  • You can conduct your banking in a branch, over the phone or through mobile or internet banking.
  • ICICI offers a variety of financial calculators on their website to help you manage your business’ finances.
  • ICICI offers a Business FX Online Payment and Transfer Service. You can transfer in CAD, USD or Indian Rupees. Funds can be transferred to 190 countries across the world. You can transfer money to any bank in India with special FX rates.

Cons

  • Withdrawals in the branch have a $5 associated fee.
  • ICICI currently only has branches in Ontario, Alberta, and British Columbia.
  • Not all fees and charges are clear on ICICI’s website.

What is a Business Savings Account?

As it sounds, a business savings account is an account that business owners can use to store business savings. It is not intended for everyday use; rather, it is used to receive interest while paying minimal fees. If a business needs to make everyday transactions, a business chequing account or credit card is a better option.

A business savings account typically needs to be paired with a chequing account or credit card. This is because you typically can’t use a savings account to make transactions. But, you can make transfers to your chequing account or pay bills for credit cards or your business with it. There are a number of situations where it’s beneficial to take advantage of savings than take a business loan. To get the hang of it, make sure to read the business loan FAQs.

What are the Differences Between Personal and Business Savings Accounts?

The main draw of a personal savings account is the interest you can earn. Banks typically offer higher interest rates with savings accounts to encourage customers to store their money in the account long-term. Business savings accounts do also offer interest, but the rates tend to be lower compared to personal savings accounts.

Business savings accounts can also typically be accessed by multiple people. If your business has more than one person in charge of finances, each person can access the account. A personal account can only be used by the person whose name it’s in unless it’s joint.

A business account tends to have more fees than personal savings accounts do. The two banks we discussed don’t charge many fees for their business account, but some banks might.

Are Business Savings Accounts Insured?

In Canada, the Canadian Deposit Insurance Corporation insures deposits up to $100,000 to banks that are a member. This means all of your chequing accounts and savings accounts are covered if the bank you are with is a member of the CDIC. Most banks in Canada are members.

That being said, only a total of $100,000 per entity will be insured. This means if you are a sole proprietor, your business income will count towards your $100,000 coverage. So, incorporating your business may be the best idea in this case. This way, you get the best of both worlds as a $100,000 of your own money will be insured as well as $100,000 of your business funds.

Why Open a Business Savings Account?

Opening a savings account for your business is one of the best things you can do. If you have money that is not necessary for daily operations, why not save it?

Obvioulsy, not every business is able to save money. If you are looking at getting a business start-up loan, then perhaps you’re not in a position to be exploring savings accounts for your business.

However, If you find a bank that offers good rates of interest, you will be passively earning cashback on top of your income. Passive income is one of the best ways to make extra money. Especially in this case, as there is no risk in putting your money into a savings account.

Having a savings account for your business is also the best way to budget and see what you can afford. Do you need new equipment, new staff or renovations? Check your account to see if you can afford it.

The Bottom Line

Whether it’s for your business or for yourself, a savings account is the best option for saving money. Your business income could be earning even more money in savings accounts if the bank offers a good rate of interest.

If you are interested in banking with Scotiabank or Tangerine, head to their website and start the application process online.

There’s nothing to lose when opening a savings account, especially when the CDIC insures up to $100,000 of your deposits. Choose the best path for your business and open your business savings account today!