It’s fairly common, in my experience, for small business owners to have chaotic business bank accounts. Some small business owners don’t even have business bank accounts when they start their companies. While money is at the heart of our businesses, most people tend to think about generating sales and increasing revenue, and leave the behind-the-scenes organization to fall by the wayside.
That can come back to bite you in your work. An organized business bank account is easier to use, easier to get accurate reports from, and easier to expand as your business grows.
Organize your business bank accounts
First things first; you should open a business bank account for your business. If you’ve been using your personal accounts, find yourself a bank or credit union that you like and head down in person to open an account for your business. You’ll need to bring identification and business documents, but it’s well worth the hour of your time.
After that comes the organizing! Each small business is different, and thus will have unique needs. However, there are a few accounts that a great jumping off point for anyone.
Operating expenses: This is the account you will pay the ongoing operating expenses for your business from. Think things like your website hosting, day to day supplies, or travel expenses. This account is for your business bills.
Marketing/advertising: While there are plenty of free ways to market your business, advertising is a multi-billion dollar business for a reason. Paying for advertising can yield much greater returns, so a marketing account is a good idea.
Business savings: Building up savings specifically for your business is always a good idea. This money can be used for future projects, expansion, or just exist in case of a business slow down.
Taxes: This is mandatory. You must pay your federal and, if applicable, your state taxes. Generally speaking, saving 30% into this account is enough.
Why This Matters
Having these accounts delegated out helps you stay organized as a business. You won’t accidentally spend your tax money on a new product when the money is in separate accounts. Outside of that, getting organized also makes tracking your spending easier. You can see which transactions come out of which account to help with your monthly statements and annual taxes.
An organized bank account will hopefully also stop you from doing any procrastinating on any financial housekeeping. Many business owners say that doing their own accounting and bookkeeping is one of the least exciting parts of owning their own business. Making the task as simple and easy as possible will make it easier to knock off your monthly to-do list.