My Business Bank Accounts, Savings, and Taxes

I get a lot of questions about what I do, and how I manage my business's finances. I don't do anything special or have some super-secret knowledge from being in the banking industry, what I do is fairly normal actually. But this is how I have my business finances set up...


🔸I have three (3) bank accounts for my business. They are all at separate banks and the only reason for this is because I wanted to try out each bank to see if they were as good as they seemed.


🔸I use one (1) accounting platform that includes invoicing.


🔸I use one (1) savings app for taxes, PTO, and retirement.



Please note: No companies mentioned in this blog have endorsed or sponsored this post. The links to Azlo, Lili, and Catch are referral links. This has NOT influenced my reasoning of mentioning them as you will read at the bottom of this post and understand why.



The three (3) banks I use are Alzo, Lili, and Indi. Azlo is a client escrow account where I hold their filing fee payments for various things for clients until I submit them to the appropriate place. Lili is my operating account for normal business expenses and Indi is my business savings account. Indi is actually a checking account, I just pretend it's my savings account.


Now, most businesses do not need three (3) accounts or possibly even two (2), but again, this is how I do things. Everything has its place and it's easier for me to track, reconcile and not have to do a lot of calculations when I need to withdraw or transfer money from somewhere -- Ex: If I held my client's filings fees in an account that also held my businesses finances, I'd have to be extra diligent that I didn't use their money accidentally for my businesses bills or whatever else.

It just keeps it clean and simple, especially

for my bookkeeping and comes tax time!

Obviously this isn't something most businesses need,

but you could set something up like this just for specific bills, payroll, etc.


I keep my savings separate for basically the exact same reasons -- so I don't accidentally use it, I ensure it's tucked away and "out of sight" unless I truly need it and I don't have to do frequent calculations for my main/operating account to ensure I have a cushion in there.


Lastly, my operating/main account is just that, it's for all other business expenses. Software subscriptions like Wix, Canva, G Suite, where I pay my VA (if I had employees or multiple contractors I most likely would open a separate payroll account), office supplies, client gifts, one-off purchases from Creative Market, and literally anything else you can think of.


If you decide to do something similar, there is no need to use multiple banks. I simply wanted to try them out and I love each one. Azlo currently only allows you to have one (1) account so I would have needed an additional bank anyway. And, Lili and Indi have 'built-in' savings accounts that will transfer a percentage of your deposits into a 'tax jar'. Although this is automatic, I use a separate app for my tax savings, PTO and retirement accounts and therefore I consider those 'tax jars' as small cushions in the event I calculate something wrong, overspend or something like that - then I have extra money right there to transfer over to cover it.


The app I use for taxes, PTO, and retirement is called Catch. (Catch isn't actually just an app, I just have gotten used to calling it that for some reason.) Catch links to your bank account and you set a percentage amount that you want it to pull every time you get a deposit to the account you linked. Before it pulls the funds, it will ask you if it's 'okay' with you -- if needed, you can skip that transfer, or only transfer into one of the accounts you have, etc. You can withdraw from the accounts at any time, whenever needed. Although the accounts are for taxes, PTO and retirement, you really can use them and consider them whatever you'd like to. It's just how Catch has labeled them for use. I do really love the idea of a PTO account since we all know, we don't get any paid time off. In the first two months of 2020, I was basically on bed-rest due to my Lupus and it was great being able to pull a few hundred dollars from there to help us out. I had kind of forgot that I had set it up and when I went to see what I had - it put a smile on my sickly face, lol. Good job Montanna...you're killing it at this adulting thing.


The accounts with Catch are FDIC insured, minus the retirement account. Retirement accounts are not eligible for FDIC insurance. They are adding several different account options like insurance, HSA, childcare, etc and I can't wait until those are available! There is no fee for Catch at all. I also love that Catch will ask you if you want to make a transfer for any type of "credit" you get to your account, so if you get a refund, interest paid on your account, etc it will ask you. I usually always transfer any refunds I get, especially if they are kind of a small amount - I lived without that $20 or so for a few weeks anyway, might as well move it over to Catch for a rainy day.



And for my accounting and invoice platform, I use Wave. The overall platform is free to use, with no monthly or annual fee like some others out there. (Of course, there is a fee for accepting payments, which we all know everyone has. (Read our previous blog about payment processing fees & see if you have the option to legally pass them onto your clients/customers) I truly do not see the reason to not have your payments and accounting on one platform...it's all in one spot, one platform, automatically calculated in your bookkeeping, reports, etc. Wave allows you to customize your invoice layout, colors, logo, what information shows on the invoice (hours, quantity, etc), creates estimates, you can input products/services, calculates taxes and has payroll options, tax options, you can link multiple accounts, you can link several businesses and you can even link personal accounts if you'd like -- and there are a lot more features, I simply don't use them because it's not a need in my business right now.


There you have it, this is how I have set up my banking and manage my business finances. As I said, there is no right or wrong way to do this, the only thing it should be based on, is how it works for YOU and YOUR business. If you'd like to chat about your situation, get recommendations about what may work for you, or anything else, please reach out. I'm happy to brainstorm with you. Not only have I seen countless setups in my 15 years of banking, but I've tried just about all of them too!


Next up in our business financial roundup, Halo Insights, LLC will be back with deets on strategic planning and budgeting for your business (If you missed our first post about them, check it out and grab the epic freebie they have for you).


After that, would you be interested in a deeper dive into my business financials? Maybe how I pay myself, what I set aside for taxes and how I settle on that amount, what my monthly expenses are, and why...? As I've said before, I hate when people give you generic amounts and generic scenarios when it comes to things like this. IDK why, but I just feel like it's not as helpful as it could be with actual real numbers, so I want to be as transparent and actually helpful as I possibly can.



-MW





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No companies mentioned in this blog have endorsed or sponsored this post. The links to Azlo, Lili, and Catch are "referral" links. Although the Azlo link is technically a referral link, I do not get any type of compensation if you use the link. Lili will credit my account $10 for every 10 new customers who sign up and Catch will send me a free T-shirt for every 5 people that sign up. Obvs, I'm after that T-shirt. This post is NOT about the benefits to me

if you use those links, I genuinely love each one that I use.

And why exactly would a former banker use a bank they didn't like...?


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This blog is not legal or financial advice nor does it constitute a client-consultant relationship. Read our legal disclaimer to answer further questions. Should you want to discuss a client-consultant relationship, schedule your free consultation.



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