My business banking setup

When you start working with a new business bank, you usually start with just a single checking account. You may also have a savings account, especially if you use a credit union.

As your company grows, your banking situation will probably become more complex.

So, which bank accounts does your company need?

The answer depends on your company’s structure, its needs, and your personal preferences.

But to give a more concrete answer, I thought I’d share my current banking setup. Keep in mind: this works for my firm and me, but it might not be the proper setup for you.

Accounts

I currently use the following checking accounts:

Operating This is the primary checking account with the most activity. All of the income deposits come into, and most of the bills pay out from, this account.
Profit Twice each month, an automatic transfer moves cash from the operating account into the profit account. Then once each month, a distribution pays out from this account to my personal joint checking account with my wife.
Tax Returns My firm uses tax preparation software that charges per return. I bulk purchase most of those returns between January and March. I know roughly how many returns I will prepare each year, so I have monthly transfers into this account to smooth out the cash flow.
Travel Now that we are (sort of) post-COVID, I have a couple of annual conferences I attend. I also belong to a small group of accounting firm owners who meet in person twice a year. That much travel gets expensive, so I try to smooth out the cash flow hit with monthly transfers into this account.

The goal with accounts is to smooth out cash flow as much as possible. I want to plan how much will come into, and go out of, a bank account throughout a month as closely as possible to avoid a potential overdraft while deploying as much cash as possible.

Whenever I have a type of transaction that will significantly affect cash flow, I can open a new account, set up a recurring transfer into it, and use the new account.

Relay makes it super simple to open a new checking account. It’s one of the reasons it’s my preferred business bank.

Cards

Having multiple checking accounts can mean having several debit cards to keep up with. If your bank relies on physical debit cards, that can become onerous.

But with Relay, I have just one physical debit card tied to the operating account, and I have about 20 virtual cards, each connected to one of the four accounts.

I can instantly create a new virtual card for any account and immediately use it to sign up for a subscription, pay a bill, or book a flight or hotel room. I don’t even carry my physical card. It stays safely in my home office, even when I travel.

The strategy with cards is to have one per repeat vendor. Anytime I know I will spend money more than once with a particular service, I create a new virtual card and label it with that service.

Creating a new card for each vendor helps keep the rest of my accounts and cards secure if that vendor ever experiences a security breach or if I can’t easily cancel a subscription. I can delete the one vendor card without affecting my other cards or accounts.