Why You Want Multiple Business Bank AccountsOct 07, 2022
When you're running a small business, it can be difficult to stay organized. You have so many moving pieces, and it's often hard to keep track of everything. One way to make things a little bit easier is to use multiple bank accounts. While it may seem to be a burden to manage multiple accounts, there are actually a few benefits.
For one, you can see how close you are to reaching savings goals for specific investments. When you have everything in one account, it can be difficult to see how much you've set aside for different purposes. But when each bank account is dedicated to a specific goal, it's easy to see how close you are to reaching your target. You can even transfer a certain amount automatically from your revenue to make sure you have funds allocated to them. For example, having a philanthropic fund or a mastermind savings account.
You can also monitor your budgets and prioritize effectively. Business owners are often blindsided by taxes at the end of the year, but using a tax savings account during the year adds some peace of mind. We recommend making this a high-yield savings account and not withdrawing from it. The same goes for sales tax. The sales tax you collect should be set aside, because that money will be remitted to the state. Setting aside taxes helps you see what money is truly available for spending and what has been dedicated to tax compliance.
Another benefit of multiple bank accounts is that it allows you to pay yourself first. When you have a separate account for business expenses and personal expenses, you can make sure that you're putting aside money for personal expenses and making sure your business is generating cash flow for you. This is especially important if you're running a business that has variable income.
If you do set up these accounts, resist the temptation to move money between them so you can spend more. It is important to preserve the integrity of your plan and manage your cash effectively.
Overall, using multiple bank accounts can help small business owners stay organized and on top of their finances. It's a simple way to make things easier to manage, and it can help you save money in the long run. So if you're feeling overwhelmed by your finances, consider opening a few additional bank accounts. It just might be the solution you need.
Looking for a bank that makes this easy? Try Relay Financial. They offer modern business banking and enable to create accounts in just minutes.