How to Manage Your Business Finances: The 5 Accounts I Use

In this video, I explain how I manage my business finances.

I'm not an accountant or bookkeeper, but this system has really been a life-saver for me. Maybe it'll help you too.

To summarize, there are 5 accounts I use:

1. Business Checking 

All the revenue from Stripe, PayPal, etc. gets deposited into this account. That keeps my business and personal money separate. Then what I do is take a very conservative estimate of my average monthly revenue and use that to create some automatic monthly transfers in the accounts below. I'm using $18k.

2. Business Savings

Every month, I automatically transfer 5% of my conservative revenue estimate ($900) here as profit and 15% ($2,700) for taxes. The only time I touch this money is if I'm paying quarterly estimated taxes, taking extra profit out of the business, or if sales have been low and I need to cover myself in an emergency. I like to keep 3-6 months worth of expenses in this account.

3. Personal Checking

This is just the standard checking account that I had before starting my business. Every month, I transfer about 37% of revenue ($6,660) from my business checking into my personal account. Since I'm an S-Corp, part of this is my paycheck as an employee and part of it is my profit draw as the owner.

4. Solo-401k

This is a type of retirement account you can have in the United States if you run a business with no employees. It allows you to put a ton of money away into tax advantaged accounts. Each month, I put 13% of baseline revenue ($2,340) into this account as employee and employer contributions. Work with a CPA on this.

5. Business Credit Card

This is what I use for all my business expenses. I budget around 30% of baseline revenue ($5,400) each month for expenses and the card gets paid off automatically through my business checking account. Extra money gets rolled over to next month. Periodically I go through my list of reccuring expenses and see what I can cut.

This isn't financial or tax advice. Just sharing in case it's helpful for you to see someone else's system.

If you're still early on in your business and this feels overwhelming, don't worry about it. Just focus on making more money.

But if you've gotten to the point where you're making six figures a year, watch the video at the top of this post to see exactly how I use a software called YNAB to run this system in my business.

This video is the sequel to my video about Profit First. So check that out next if you want to see how I chose the percentages for each account.