One of the most important things for us at Dollars + Sense is keeping our clients’ bookkeeping services as simple and streamlined as possible. This helps keep your costs down, and it’s far easier to have a clear view of your finances.
One question we are asked almost daily is how many bank accounts a small business should have. And our answer is pretty much the same, whether you’re a sole trader just starting out, or whether you’ve grown larger and have more complex financial needs.
There are exceptions to every rule, of course, but we recommend most businesses have three bank accounts:
- for everyday transactions
- for ATO obligations, including GST, PAYG, superannuation and tax
- for business savings.
You can separate your ATO obligations into two separate accounts, if you prefer, with GST and tax in one account, and your employee obligations in another, but it isn’t necessary to keep your books running smoothly. Although if you would like to keep an eye on your tax and your employee obligations separately to ensure they’re covered each month, separating them can help.
A word about Profit First: We do have some clients who work on the Profit First system (from the business book of the same name), which requires multiple bank accounts to separate out various financial aspects of your cash flow. It can be a good system if that’s the way you want to go, but it can also make a lot of extra work because you have to move money around in various accounts, and all deposits and withdrawals need to be reconciled. We can support you in that Profit First system if that’s what you choose, but if you want to keep your bookkeeping services simple, three accounts are enough.
Whether you decide to have three accounts, or thirteen, we always recommend you have a business savings account. You never know what’s around the corner, and when you have a surplus, it’s easy to pop it in there for a rainy day.
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