3 Tips for Small Business Owners Opening Their First Bank Accounts
Posted: 4th July 2014 09:25Whether you’re just starting your own business or have been managing one for some time, the goal is the same – make money. And what you do with that money is also important because it can mean growth and opportunity if done right or failure and bankruptcy if done wrong. How you manage your money will make or break you, it’s important to get a handle on your finances as soon as possible, starting from the ground up: your bank accounts! If the thought of bringing out your cheque register makes your stomach turn, take a look at a few tips and tricks that may help you get a handle on your finances once and for all.
Don’t Be Afraid of Multiple Bank Accounts
Thinking of running one account, let alone three, may seem exhausting. But by splitting up your money in a way that’s easy to keep track of, you can easily see where your funds are going and what you can be saving on. I recently received some advice from Thruinc (a brand who specialise in secure file transfers at the big business level), who recommend setting up three accounts: one for payroll, one for general expenses, and one for income.
Your income account will be used for any payments you receive, like credit card payments or cheques that clients have written to you. This is especially helpful if you accept a good deal of cheques, seeing as if they’re returned you can find yourself in over your head in fees and overdrawn funds.
Once the cheques have cleared, you can safely go about transferring the money to your other accounts – firstly your payroll account. If you write cheques to your employees, you may have noticed your account in havoc when an employee takes several months to deposit their payroll cheque (I’ve found myself wondering where in the world they keep these things). After doing the math, transfer the amount of each cheque to the account and it can sit there happily while you continue to use your accounts without fear of a forgotten cheque coming along.
Finally, the remainder goes to your general expenses account, which can be used for supplies and bills. Spend this to your heart’s content, or if you’re feeling really crazy, set up a final tax account where you can slowly deposit extra funds so that taxes won’t seem like a punch to the gut when they come along.
I don’t recommend doing this on your own. Seek professional help from someone who knows what they’re doing and can find you an account with the benefits and stipulations that fit your needs. Company checking websites can help, not only can they help you set up any of the business accounts you think necessary but they can also help you set up your personal accounts, which you’ll need because it’s a good idea to…
Keep Your Personal Accounts Separate
This seems like an obvious suggestion but you’d be surprised at how many people really don’t think of it as a necessity. But the fact of the matter is that it’s easy to dip a little too much into company money or overextend your personal finances if you don’t keep things easily separate. Come tax time it will be far simpler to find out how much your business has been making as well. I suggest keeping your personal and business accounts with the same bank to make things easier, but this is probably a question best left answered to the professionals as well. If you’re having trouble keeping things straight, even with your business and personal accounts neatly labeled, try out an app or two that might simplify your finances.
Be Wary of Who Has Access to Your Accounts
This one should be highlighted, underlined, bolded and flashing in neon colors – it’s that important. You may feel that it makes things easier having someone else on your accounts to make deposits and management a little simpler. But by giving them access to your accounts, you leave yourself open to a world of trouble. Legally, they can go hog wild with your finances and there isn’t a whole lot that can be done to stop them. Only put others on the account out of absolute necessity or if it’s someone you’re certain is reliable enough.
We’d love to hear how you manage your money, what works and what doesn’t. Leave your suggestions in the comments below about how you help your business succeed financially.
Krista Coulter is a freelance writer and worker in the banking industry. She loves helping small business owners make the most out of the money they make.