In Issue 064 I talked about keeping business and personal money separate. Here's the next step that a lot of my clients love: give business money more than one home.
A simple setup with three business accounts:
Operating. Customer payments come in here, and the bills, payroll and card payment go out from here.
Tax set-aside. Every time you get paid, move a set percentage here and leave it alone. When estimated taxes are due, the money is already waiting. Ask your tax preparer what percentage makes sense for you.
Owner pay. Move your pay here on a schedule, then transfer it to your personal account. You pay yourself on purpose instead of from whatever's left.
Why it helps: when you open the operating account, you see money that's actually available to run the business. Tax money isn't hiding in there making you feel richer than you are.
Most banks let you open extra business accounts easily, and some let you nickname them. Check your bank's fees first.
Pair this with paying the card weekly (Issue 071), and your bank balance starts telling you the truth.
If you'd like help setting the percentages for your business, send me a message through the Contact page.
— Rachel, Two Miles LLC