Hi Victoria here from HBA encompass, and today, I just want to talk about about bank accounts. So all businesses need a bank account no matter what kind of entity that you’re trading under. And it’s vital that this bank account is separate from your own personal bank account. The reason being is it makes it much easier to track the income and expenses of the business if you haven’t got all your personal expenditure mucked up in it. Now, I suggest under the profit first formula that you actually set up five bank accounts. Most banks these days will allow you to have additional bank accounts. They may be online bank accounts that you can’t pay money out of, but generally they are fee free. If they’re not sending you statements in the online accounts, fee free. So I’m talking about five bank accounts. So the first one is the money, the income account. So that’s the account that your money goes into. So it’s where your sales go. It’s the bank account that’s on the invoices that you send out for customers. The second account is your expenses account. So that is the money that’s set aside to pay for your bills when they are due. So that includes materials, subbies, wages, rent, anything like that. The third account is your tax account. Now, that’s where money is put away for income tax, for GST liabilities, for PAYG on your staff, for PAYG installments for yourself or your business, and for Super for your staff. And then the money is transferred out of there when you need to pay bills. The fourth account is your wages, and you put money aside for that. So that should the business cycle be a little bit up/down, you’ve always got money there to pay your wages. And the fifth bank account is your profit bank account. Now that bank account has a percentage of sales put it which builds up and then once a quarter, you take a payment out of that account as a dividend to yourself for being the business owner. And that’s different to your wages. So your wages are for you working in the business, your profit or your distribution is for being a business owner, and you only take half of what’s in that account each quarter. And hopefully that account should build up and build up, so the amount you’re taking each quarter is higher. So the moral of the story is you need to work out the percentages, and being profit first professionals we can help you with that if you need some help. But there’s really those five bank accounts. One bank account, which probably has bank fees, because that has the payments in and the expenses going out of it. And then the other four are online accounts that you use to hold your money until you need it and then you transfer it back out to the business accounts. I’m not going to tell you which banks to go to. Most banks do have free online bank accounts, do your research. So if you need any help in setting up your bank accounts or setting up the profit first system, call the office 5444 7094 or go to our website hbaencompass.com.auand book an appointment. Managing your bank accounts.
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