Want to find the best chequing account?
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Individuals are not the only ones who write cheques, make deposits and pay their bills online. Businesses require these services too, and so banks offer business chequing accounts to meet their needs. Here's a quick look at how business chequing accounts operate, some of the fees associated with having one and how to choose the right account for your commercial enterprise.
A business chequing account is simply a bank account that allows a business to write cheques and perform other kinds of transactions normally associated with a chequing account. These include debit transactions at other businesses, electronic banking, ATM withdrawals and of course, in-branch banking, too.
As with any other bank account, the principal in a business chequing account is guaranteed and insured by CDIC. Mind you, just like personal chequing accounts, little if any interest is paid on your account balance, unless the balance is very high.
Depending on how many transactions per month a business conducts, there are many different business chequing accounts available to choose from. For example, a basic business chequing account might include five (5) free transactions, whereas unlimited free transactions are available for the more expensive accounts suited to companies that do a large volume of transactions.
Of course, when we say “free” transactions, we really mean “included” transactions, because there is a monthly fee for most business chequing accounts, as there is with personal ones, too. The most basic business chequing accounts typically cost $5-7 per month, whereas an unlimited account's monthly fee can be anywhere from $35-125, depending on which lender you bank with. In both cases, banks often waive the monthly fee, if a minimum balance is maintained throughout the month.
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It's important to know what counts as a transaction for a particular account – especially if your business only has a limited number included in its monthly plan. For example, with the TD Small Business chequing accounts, transactions include any of the following:
Some banks, such as TD, also have a separate number of “deposit items” that a business can put in their account. Deposit items are things like cheques, money orders and bank drafts. This might seem confusing, because a company could have 50 included transactions, but only 20 included “deposit items”. In this example, the company could stay within their 50 transactions but incur extra charges if they exceed the maximum number of deposits. For this reason, it's important to know the details of your monthly plan, to prevent your business from inadvertently paying fees over and above the monthly account charge.
Likewise, cash deposits are often a separate feature of a business chequing account (probably because they require the bank to count all the bills being deposited). For that reason, banks may also offer a set amount of cash deposits per month (say, up to $5,000) that are included in a chequing account. Alternatively, a business might be charged a small fee for every cash deposit (e.g. $2.00 per every $1,000 deposited).
Aside from the monthly fee, there are some other charges associated with maintaining a business chequing account. If your monthly plan does not come with unlimited transactions, there will be a fee for each transaction over and above the number included. For example, if you have 10 included transactions but end up doing 15 transactions, your business will be charged for the 5 transactions that were not included. A typical fee for a transaction is $2, so in our example that would cost the business $10 (5 x $2). Fees do tend to vary based on the particular transaction, so make sure you familiarize yourself with all the possible charges associated with the business chequing account you're interested in.
Opening a business chequing account requires documentation that is much different than that which is required when opening a personal chequing account. Here is a list of the documents you will need to provide, depending on the type of business you own:
Before selecting a business chequing account, it's important to ask yourself what your business' needs are. Maybe you only do a small number of transactions per month; if this is the case, then a very basic account will suffice. Then again, you could also be conducting daily transactions, both in-person and electronically; if you find yourself in this boat, a business chequing account with unlimited transactions is probably what you want to look into.