Even for a single-person buisness, managing bank accounts can be overwhelming at times. So many expenses, how to keep track of them all? Recently a small business person asked me -- what is a good SYSTEM?
Remember what a SYSTEM does for you:
Save
Your
Self
Time
Energy
Money
So I suggested to her the following formula:
3 Business accounts
- Primary Business account (BIZ MAIN)
- Secondary Business account (BIZ AUTO)
- Business Savings (BIZ SAVE)
3 Personal accounts
- Primary Personal account (PER MAIN)
- Secondary Personal account (PER AUTO)
- Personal Savings (PER SAVE)
The purpose of separating BUSINESS and PERSONAL accounts is that it saves you headache when trying to figure out your taxes. You can quickly tell what your business is doing. It's also helpful when you have to show account balances for purposes of credit, verification, or business opportunities. Remember: deposit your Business checks into your business account, and move funds to your personal account as required (that's called "paying yourself").
MAIN account:
This is the main account used for expenses. Make sure you have a debit VISA so you can use it as a credit card. (Mastercard debit is NOT recommended because they may authorize purchases when there's not enough funds available).
AUTO account:
This is the account you will use for AUTOMATIC monthly bill payments, debits, and credit card charges. Keep track of your AUTO accounts in a spreadsheet. Because the same bills are paid every month, it should be easy to manage by depositing the correct amount of funds each month.
SAVINGS account:
Keep at least $200 to use as overdraft protection. Also keep "extra" funds there so you won't be tempted to overspend!
And remember to check your accounts online daily!
Which bank to choose?
Before selecting a bank or credit union, compare their rates and services online first. Many will offer free personal checking and savings, but most charge for business accounts. Find out:
- What are their overdraft transfer fees, and overdraft fees?
- What days and hours are they open?
- Where are their locations -- are they convenient?
- Do they call you if you're about to be overdrawn?
- And do they even offer business accounts? Some credit unions do not accept business accounts.
It's best if you can open all the accounts at the same bank. I suggest a local bank or credit union. Meet the Vice President before opening an account. Ask lots of questions. Find out why YOU should do business with THEM! Start to develop a good business relationship.
MARKETING TIP: When doing your banking, stop in personally when you can, and get to know the staff. Ask if they RECIPROCATE by doing business with their local customers (YOU)! Find how if they can refer business to you or if you can list their REO's.
Join my new AR group and post your blog at http://activerain.com/groups/virtualoffice
Regina P. Brown
Broker, Realtor®, e-Pro
Author of eBook "Stop Foreclosure Fast: Solutions to Save your House"
Text copyright © 2009 R.P. Brown, All Rights Reserved
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