Finance Tip Friday #4: Business Checking Account Management

Bank Card Online Payment Business  - PabitraKaity / Pixabay

Your business checking account should be used for operating your business, not a personal piggy bank!

This is what happens with most entrepreneurs:

They let their business checking account grow and grow and grow until the end of the year when they file their taxes, and then their accountant tells them how much they made. Then the entrepreneur withdraws the money, if they do at all…

This is not what you should be doing. Remember, money in the bank does not grow!

First, determine how much you need in the bank to keep your business operational for 3-6 months and keep that amount in the bank. It is like your personal emergency fund, but for your business.

Then open a separate account under your business for your tax obligations. Deposit approximately 30% of your profits into this account every month so you can pay Uncle Sam later.

Anything else should be taken out of the business account as a profit.

You should take your profits out of your business on a MONTHLY basis. You can then invest this money vs. letting it sit in your business checking account doing nothing for you (unless you’re going to reinvest it back into your business of course).

Doing this will create a healthy money management system in your life and business. Plus, it will allow you to really visualize how much you are making in REAL profit on a month-to-month basis. You should be taking out your profits every 3 months at a minimum, but preferably monthly for optimal growth of your money.

Leave a Reply

Your email address will not be published. Required fields are marked *

buy prednisone online buy prednisone 20mg
buy doxycycline online