Business bank accounts are essential tools for managing your company’s finances effectively. At TLS BAS & Bookkeeping in South West Western Australia, we believe having multiple business bank accounts can streamline your financial management and reduce stress during tax season. Here’s why maintaining at least two, preferably three, business bank accounts is crucial for your business’s success.
Why you need multiple business bank accounts
Everyday Account
Your everyday bank account is the primary hub for all your business transactions. This is where all your income is deposited, and from which your business expenses are paid. Keeping this account active and regularly updated ensures smooth daily operations.
Tax Account
A dedicated tax account, often referred to as the “Tax Man” or “Do Not Touch” account, is designed to cover your GST, PAYGW, and superannuation obligations. By transferring a portion of your income into this account, you can ensure that you always have funds available to meet your tax liabilities without scrambling for cash at the last minute.
Savings Account
Having a savings or “Rainy Day” account can be a lifesaver for unexpected expenses or future investments. If your business generates a surplus, it’s wise to set aside funds in this account. This prepares your business for unforeseen financial challenges and enables you to seize growth opportunities.
Effective management of business bank accounts
Wage and Drawings Transfers
Regularly transfer funds from your everyday account to your personal account for wages or drawings. Whether you do this weekly, fortnightly, or monthly, consistency is key. This practice ensures personal finances are separate from business operations, which simplifies bookkeeping and financial planning.
Tax Payments
When it’s time to pay your tax obligations, transfer the necessary funds from your tax account to the ATO. This includes payments for BAS, IAS, PAYGI, and tax returns. Having these funds pre-allocated reduces stress and ensures timely payments.
Superannuation Contributions
If you have employees or pay super for yourself, use your tax account to manage these contributions. Regular transfers from this account to your superannuation fund help you meet your obligations consistently.
Setting up your accounts
To effectively manage these accounts, it’s important to establish a clear structure and automate savings transfers. Engaging with an accountant or bookkeeper can provide you with the clarity you need to set up these accounts correctly. Automated transfers ensure that funds are allocated appropriately, allowing you to focus on growing your business.
Having multiple business bank accounts can simplify your financial management and ensure you’re prepared for any financial obligations. Accurate bookkeeping and diligent financial planning are crucial for your business’s success. If you’re looking to optimise your business banking in Bunbury, Collie, or anywhere in South West WA, TLS BAS & Bookkeeping can provide the expertise you need.
For more insights on managing your business finances or to get started with professional bookkeeping services, visit our services page or connect with us on Facebook.
