Are you using separate accounts for your business? Having multiple accounts is a great tool to separate personal from business for budgeting. Here are four accounts that every business needs to have.
1. Daily business accounts
Use this account for your business expenses and income – including paying rent, and paying yourself or staff wages. Put the account number on all of your invoices and online payment services. You should open this account with a debit card so you can make online purchases and Eftpos payments. To avoid accidentally spending money for personal use, mark your card with a sticker saying “business card”.
2. Income tax account
Business owners are not taxed on their payday like salaried employees. You should be putting 20%-30% of your income into this account every time you pay yourself to avoid getting caught out when you need to pay your taxes. If you’re paying provisional tax, the rule stays the same. Some banks also offer savings accounts with better interest rates if you don’t withdraw money for a certain amount of time.
3. GST account
If you’re not GST registered, you won’t need a separate account for this. If your business is GST registered, you’ll need to put away 15% of the gross amount charged to your customer, not 15% of the payment you receive – don’t forget that whatever clients pay you is inclusive of GST. When it’s tax time, you’ll be sure there’s enough money in your account to make the payment.
4. Growth account
Finally, you’ll need a growth account where you can put aside profits to grow your business. If you put all of your profits into your own account, you may end up spending it. Choose a percentage that’s comfortable for you and put it in at the end of each week. As the account grows, you can use it for things like buying new assets, paying for staff training and large one-off expenses.
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