Image Source: Unsplash – CC0 License
If you’ve just graduated and started a new company, it can be difficult to know how to manage it properly. Managing its finances is particularly challenging, especially if you haven’t experienced business banking before.
Here are some of the most effective ways to manage your business banking. Make sure you’re using these methods to ensure that you remain compliant and can keep track of your cash flow.
Separate Personal and Business Banking
You’ll want to start by properly separating your personal and business banking. Don’t fall into the trap of using your private credit card to pay for business transactions. It can backfire seriously, and creditors may consider your personal finances part of your business finances and claim them in any legal dispute.
To fix this problem, make sure you open a dedicated business checking account and credit account immediately. Use an account that’s tailored to the specific type of firm that you run. For example, there are banks like Slash that work with start-ups.
Set Up a Multi-Bank Account Bucket System
Don’t rely on a single checking account for all of your banking expenses. Instead, set up a multi-account bucket system where you can see where money is going, especially if you’re running a complex business.
To do this, use an open banking data API. These systems can connect multiple banks together and give you more functionality, allowing you to keep track of all of your accounts from a single dashboard.
Also, make sure you move a fixed percentage of your monthly income to a tax-specific account so you can pay your taxes on time without eating into your cash flow later. Include your taxable income in your pricing so you’re never caught off guard.
Automate Sweep and Savings Rules
Image Source: Unsplash – CC0 License
Another great way to maximise the efficiency of your business banking is to automate your sweep and savings rules. If you let cash sit idle in a zero-interest checking account, it means that you’re losing purchasing power all the time to inflation. You can manually move cash between accounts, but that can get tiring pretty quickly.
The fix is to set up automatic sweep rules, which most business accounting software now offers. All you need to do is instruct the system to move balances over $10,000 from your checking account to your high-yield business savings account or a business certificate of deposit to earn interest. You can do this for different thresholds, and you can even transfer money between accounts automatically and use topping-up methods.
Sync Your Bank Directly to Your Accounting Software
Finally, if you run a complex business, you can do clever things like synchronise your banking directly to your accounting software. Integrations are available across most major platforms. For example, Mercury allows you to integrate with QuickBooks automatically, filing away expenses for you and showing your transactions on various state financial statements that you need to produce for your company. You can also integrate with Xero and Wave if necessary.
So which of these ways are you going to manage your big business accounting to reduce daily chores?
Add Comment