I will admit that I’m not good with numbers. I’m far better at making it than accounting for how it’s spent. I used to get all stressed out trying to decipher what I spent and why. With all the 5 bazillion things I have to do, I don’t have the patience or head space to keep up with receipts, spreadsheets or mentally calculate my expenses.
I also LOVE to look at my bank balance. I get a great sense of accomplishment seeing all my hard work add up in the way of “coinage” LOL! But then I get really pissed when it’s time to pay invoices and that number starts to drop. Ughhhh… unexpected expenses are the absolute friggin worse!
After years of my accountant giving me sh*t about NOT keeping up with expenses then whining about bills and taxes, she finally gave me an ultimatum. She gave me a list of bank accounts that I needed to open and made me sit online on a bloody Sunday morning and open each and every one.
Let me backtrack. Previously I only had one bank about for my business. All the funds were all mingled in there and I was attached to watching that balance like a hawk. What Miss Smarty Pants Accounting Lady did was make me open separate accounts for my major recurring expenses.
Let’s take taxes for example. I can put aside money to pay my taxes each month. By the end of the quarter, I have the proper amount saved. When I write Uncle Sam the check, I don’t have to see my primary account balance dwindle.
Another gut busting bill was the expenses for my annual conference, the Game ChangHER Summit. This is technically a marketing strategy, so all of its expenses now come out of my marketing account without dipping into my operating budget.
The best thing about this whole process is it doesn’t require any pen to paper or mental gymnastics for me to track. So here are the 4 bank accounts I think every small business should have:
- Taxes – Yep, you gotta pay ‘em
- Payroll – Don’t forget to pay yourself first
- Operations – Office supplies and software type stuff
- Marketing – Welp, you know why…
Let me know how this lil system works for you.
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Tiffany Shepherd says:
Wow! This is powerful! As a businesswoman just starting out, without any profits yet, just expenses. Do you suggest I do the same thing and take out the different bank accounts?
WiregrassDemocrat says:
This is a great idea…I gotta use this one.