The Solopreneur's Two-Bank Strategy For Maximum Business Benefits

Combining Profit First Cash Management with Traditional and Online Banking

Published May 19, 2025

WHAT'S IN THIS ARTICLE
Solopreneur Two-Bank Strategy | How To Apply This Strategy | Bank Selection Strategy | Implementation Tips |  Security Considerations | Software Integrations | Implementation Checklist | Important Warnings

As a solopreneur, your banking strategy can significantly impact your business's financial health. An increasingly popular approach is maintaining both a traditional and an online bank account. This two-bank strategy offers the perfect blend of conventional banking services and modern digital convenience.

Bank-to-bank transfers are crucial if you use this strategy! It's essentially about having the best of both worlds - the security and services of traditional banking combined with the convenience and better rates of online banking. This feature allows you to:

• Move money easily between traditional and online accounts
• Take advantage of better rates while maintaining brick-and-mortar services
• Manage cash flow more efficiently
• Reduce dependency on a single institution

Traditional vs Online Banking

Under this solopreneur two-bank strategy, you'll still want to keep a traditional bank account - here's why.  Let me be clear, it's extremely important to maintain a good business relationship with a bricks and mortar bank. Traditional banks remain essential for several business operations and do some things really well that online banking cannot compete with:

• Handling cash deposits
• Providing bank drafts and certified checks
• Issuing business credit cards
• Giving you face-to-face help when you need it
• Offering business loans and lines of credit
• Providing and managing POS services
• Parking excess cash in cashable GICs (Guaranteed Investment Certificates)
• Providing safety deposit boxes for your important contracts and business documents

But here's the thing - traditional banks like the big five - Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD Bank), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC) - aren't giving the best deals anymore. Their service fees are high, and their interest rates? Let's just say they could be better.

That's where online banks come in. They're offering:

• Much higher interest rates
• Lower or no fees
• Convenient 24/7 banking
• Great digital tools like self serve bank-to-bank transfers
• Multiple account management options

Example of Two-Bank Strategy

Let me tell you some exciting news.

Online EQ Bank is launching a new Business Account in July 2025 that looks really promising. It has been in beta testing mode for existing banking clients for the past year. It will allow up to 10 accounts under one login - Perfect for implementing the Profit First cash management system! This system helps you organize your finances by separating money into different accounts for Operating Expenses, Profit, Owner's Pay, Taxes and more.

Great! Let me tell you what EQ Bank's new business account will offer. It's not quite as full-featured as traditional banks yet (they're still new to the business banking game), but check this out:

• They're offering a sweet 2.5% interest rate (though this usually change when Bank of Canada adjusts rates).
• It's very flexible as it has no minimum balance requirements.
• No monthly fees. Yep that's right. Zip. Zero. Nada.
• 100 free incoming e-Transfers monthly which should easily cover most solopreneur's deposit needs.
• You can deposit cheques right from your your phone using their banking app, all for free.
• 50 free outgoing e-Transfers monthly which should cover most solopreneur's needs. It's just $0.50 after that if it doesn't.
• There are free EFTs and bill payments too.
• You can schedule bank-to-bank transfers ahead of time helping you automate some of your banking tasks.

Now, there is one catch - if you need to handle POS (Point of Service) transactions, EQ Bank isn't your best bet yet. That's why, before I retired, I often recommend the RBC Digital Choice Business account to my clients. I've been a fan since it launched early this century. Fun fact: it used to be completely free, but in 2013 they started charging $5 monthly, which is now $6. At the time of this writing, RBC Digital Choice Business account offers:

• $6 monthly fee
• Unlimited electronic / mobile / ATM cheque deposits
• Unlimited Moneris deposits
• Physical cash deposits do have associated service fees that vary depending on whether it is a branch deposit, an ATM deposit, or a Night and Day deposit
• Unlimited electronic debit and credit transactions
• Includes bill payments and request payments from clients
• Paper debit and credit transactions were $2.50 each
• 10 send Interac e-Transfer® are included; $1.50 per transfer thereafter
• Free electronic statements

The downside? No interest on your balance, and their savings account rates aren't competitive with online banking. But they do offer handy one-year cashable GICs.

Want to hear about another interesting option? While online Tangerine Bank does not offer a business checking account, it does a Business Savings account which is meant to complement a business chequing account from another financial institution. It has the following features:

• Pays daily interest (currently 1.95%)
• No monthly fees
• No minimum balance
• Offers non-redeemable business GICs

🦆 Quick Duck Tale: Tangerine used to offer even better rates when they were ING Direct Canada, before Scotiabank bought them in 2012. Now you have to watch for their promotional periods to get the best rates.

Other Canadian Small Business Account Offerings

Let me share some other banking options that might work for you. The Canadian banking world is finally giving solopreneurs some better choices!

1. BMO eBusiness Plan seems worth checking out:

• No monthly fee
• No minimum balance to worry about
• Ulimited electronic transactions except Interac
• Unlimited Moneris transactions
• No fees on items deposited or cash deposited
• You get 2 free Interac e-Transfer® each month then pay $1.50 each

2. TD Basic Business Plan seems pretty straight forward:

• $5 monthly fee
• No minimum balance
• First 5 deposit items are free, then 22 cents each
• Accepts POS deposits
• 5 free transactions then $1.25 each
• Cash deposit cost $2.50 per $1,000
• Sorry, Interac e-Transfer® fees apply
• But you get free online statements with cheque images for seven years

3. CIBC Basic Business Operating Account keeps it very old school with service fees for everything:

• $6 monthly fee
• $1.00 for each self-service transaction and $1.25 for each full-service transaction
• Deposits per month are pay per use
• Interac e-Transfer® fees apply
• Electronic bank statements are free

4. Lastly, Scotiabank Basic Business Account (between you and me, you really need to read the fine print on this one!):

• $10.95 monthly fee but they'll waive it if you keep a minimum monthly balance of $8,000 plus
• Deposit fees vary between nil (mobile deposits) to $5 each
• You get 1 free transaction per month per every $1,500 of minimum monthly balance, otherwise fees range from $1.00 to $1.25 each
• Sending Interac e-Transfer® costs you $1 each but are free to receive
• Free electronic bank statements

Here's why using both traditional and online banks is so smart - you get the best of both worlds! By combining both banking types, you create a strong financial foundation that provides the security and services of traditional banking alongside the convenience and better rates of online banking. This approach helps you solopreneurs maximize their banking benefits while maintaining flexibility in your business operations.

Want to hear how to put this all together with the Profit First system? It's pretty clever stuff!

Let me show you how to make Profit First work with this solopreneur two-bank strategy. It's actually pretty simple once you get it set up.

Think of Profit First like having different envelopes for your money, but instead of actual envelopes, we're using bank accounts. Here's how to organize them from a Canadian perspective:

Profit First Core Accounts:

1. Your income account is where all your incoming money lands first.

• Use your traditional bank if you handle POS transactions.
• Use the online bank if you don't.
• Remember to keep the minimum balance needed to avoid fees if it applies.
• Transfer funds to other accounts every two weeks (this keeps you on top of your cash flow).
• Monitor bank fees if using a traditional bank.

2. Profit Account (this is the business's reward jar)

• Keep this at your online bank to earn better interest and incur no service fees.
• Start by putting 5% of income here initially.
• Don't touch this account except to distribute your Quarterly profit distributions.
• Keep it separate from operating funds so that it acts like a forced savings account for your business.

3. Owner's Pay Account (your personal 'salary' fund)

• Also keep this at your online bank to earn better interest and incur no service fees.
• Aim for 50% of income at first.
• Setup regular scheduled transfers to personal account. (For example, twice a month on the 15th and 30th.)
• Your money earns interest while waiting for payday.
• Stops the need for ad-hoc dipping into the business funds to cover personal spending.

4. Tax Account (because the taxman always has his hand out!)

• Online banking account again. Do you see a pattern here?
• Set aside 15-30% of incoming funds depending on tax bracket.
• Don't forget to Include GST/HST provisions and quarterly / annual reporting payments
• Setup autopay for your quarterly income tax installments through your CRA My Business Account.
• The interest earned here helps offset your tax bill a bit.

5. Monthly Operating Expenses Account (your day-to-day business spending money)

• Use an online bank account to take advantage of those interest rates while incurring no service fees.
• An operating account creates a psychological barrier to spend within the business's means.
• It is usually about 30% of what's left.
• Keep just enough for planned expenses.
• Earning interest helps pay the bills too.

🦆 Duck Tip: Set up an emergency fund too! Keep 2-3 months of expenses in cashable GICs at your traditional bank. It's harder to access on a whim, which is exactly what you want for emergency money! Cashable business GICs create a great psychological barrier to casual access. These funds are to be used for true emergencies only. 

Traditional vs Online Benefits and Strategic Use

Let's compare the benefits of both traditional and online business banking services to help you get a feel whether the solopreneur two-bank strategy would work for your business.

Benefits and Strategic Use of a Traditional Bank:

• Acts as your income account management if you accept POS transactions.
• Maintain minimal business activity to avoid high service fees and to ensure your account does not become inactive.
• Park extra cash such as emergency funds in one year cashable business GICs to show assets and stability to your bank.
• Process only a few strategic transactions monthly again to keep service fees low.
• Use it for specific vendor payments requiring a traditional bank. 
• It accepts cash deposits.
• Business debit and credit cards are available.
• In-person services are available.
• Maintain and build relationships with banking personnel to facilitate future lending potential.

Benefits and Strategic Use of an Online Bank:

• You get higher interest on all account balances.
• There are no monthly fees. Zip. Zero. Nada.
• Enjoy no fees on deposits.
• Enjoy unlimited bill payments too.
• You gotta love free bank transactions.
• Multiple account options make it easy to setup and manage cash the Profit First way.

As I see it, using the solopreneur two-bank strategy has the following advantages:

• Minimizes bank fees.
• Maintains bricks and mortar bank relationship.
• Reduces spending temptation.
• Maximizes interest earnings.
• Provides emergency buffer.
• Keeps operating funds lean.

Win-Win.

Now, let me share some tips on managing all these accounts without losing your mind. Trust me, it's easier than it sounds!

Twice a Month Transfer Process:

Let's talk about your twice a month money moves (it keeps you more engaged with your finances):

1. When money comes in:

• Your account balance minus your account cushion equals your deposits to be allocated.
• Split the balance into your different accounts using your target percentages.
• Use your Profit First allocation tables as your guide.
• Do this every two weeks, like clockwork - mark it in your calendar!

2. Here's how to keep each account running smoothly (I call it account management):

• Income Account: Keep the balance minimal - just enough to avoid fees if you are using a traditional bank.
• Profit Account: Hands off until quarter-end! (It's like a cookie jar - no sneaking!)
• Owner's Pay: Set up automatic transfers to your personal account. I suggest twice a month on the 15th and 30th.
• Tax Account: Add monthly, take out quarterly for income tax and sales tax payments
• Operating: Watch this one like a hawk

Here's what I've learned works best when starting out:

1. Start Small

• Don't try to hit perfect percentages right away.
• Give yourself 6-12 months to get to your target numbers.
• Focus on building the habit first - that's the important part!

2. Use Technology (It is your friend, really!)

• Set up automatic transfers where you can.
• Connect your accounting software.
• Turn on bank alerts (they're like having a financial assistant).

3. Keep Tabs

• Check balances weekly (I suggest every Monday morning with coffee or tea).
• Adjust your percentages as needed.
• Don't forget those quarterly profit distributions - they're your reward!

4. Don't Ignore The Tax Man!

• Make provisions for your GST/HST collections and CRA payments so you keep off CRA's radar. 
• The tax man always comes so setup automatic quarterly income tax installments.
• Save for your annual CPP contributions (Schedule 8) that come due when you file your T1 tax return.

Advanced Strategies:

Let's dive into some savvy moves for when you've got the basics running smoothly.

1. GIC Laddering for your Profit account: Think of it like planting money trees that bloom at different times. Set up 3, 6, and 12-month GICs. When one matures, either take your profit or roll it over. This way, you're always earning better interest but can still access cash if needed.
2. Emergency Buffer (Your business safety net): Keep a small cushion in your operating account. The real emergency fund should be separate. Aim to grow it to 2-3 months of your operating expenses. Put it in cashable GICs at your traditional bank to make it slightly harder to access (trust me, this helps resist temptation!). It will help establish your stability with your traditional bank should you ever need to apply for a loan.
3. Growing Your Business: Review and adjust those percentages every quarter. Bump up your profit percentage as revenue grows. Think of it like giving yourself a raise! Remember, in bad times, you may have to cut your profit percentage.

🦆 Duck Tip: The Profit First system works best when combined with disciplined banking practices. Using both traditional and online banks helps maximize interest earnings while maintaining necessary business services with reduced service fees.

Success Metrics?

• Growing profit account
• Consistent owner's pay
• Adequate tax provisions
• Stable operating expenses
• Reduced financial stress

This combined approach ensures you're not just managing money but building real business profit while maintaining efficient banking operations.

Now, let's talk security because nobody wants their money walking away:

• Always use two-factor authentication (no exceptions!).
• Never, ever share your login details.
• Check your accounts daily (it takes 2 minutes).
• Set up fraud alerts (they're like having a security guard).
• Use separate business-only devices for banking.
• Update those passwords regularly (I know, I know, but it's important!).

Let's chat about software integration because who has time for manual entry these days? Consider software compatibility when choosing your banks.

• QuickBooks Online plays nice with all major banks.
• Xero connects directly (no data scraping) with RBC and TD.
• Wave offers free bank connections.
• Sages is compatible with the major Canadian banks.
• (Still waiting to hear about EQ Bank's software integration plans! Or not!)

Ready for a handy checklist to put all this into action? I've got one that'll make sure you don't miss anything important!

Alright, here's your 'Get It Done' checklist. I recommend tackling this over a couple of weeks.

✓ First Steps (Week 1):

1. Open your traditional bank account first (they're pickier about paperwork).
2. Apply for that online business account.
3. Download the banking apps.
4. Set up two-factor authentication (do this immediately!).

✓ Setting Up Your System (Week 2):

1. Create all your Profit First accounts.
2. Establish those bank-to-bank connections.
3. Schedule your twice a month transfer dates.
4. Set up account alerts (you'll thank me later).

✓ Final Touches (Week 3):

1. Link your accounting software. (Xero now gives you the option of downloading your data from your PDF bank statements if you are uncomfortable with using bank feeds.)
2. Buy that one year cashable GIC for your emergency fund at your bricks and mortar bank.
3. Watch for your business debit and credit cards to arrive in the mail. EQ Business Bank account does not have a debit card at present but I expect they may introduce a prepaid MasterCard (like their personal banking accounts) in the future. EQ likes to implement new features one at a time.

And here's my final piece of advice: Give yourself permission to not be perfect at this right away. It's like learning to ride a bike - you might wobble at first, but soon you'll be cruising!

Remember, the goal isn't to create more work for yourself - it's to build a system that makes your business financially stronger and your life easier. Start small, stay consistent, and watch your business thrive!

Profit First is a registered trademark in the U.S. and other countries.

Disclaimer: I am not a certified Profit First Professional or associated with Mike Michalowicz. I just like the system and introduced some of my client's to it. Get Mike's book to learn more about the system.

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