Should your small business have multiple bank accounts in 2023?


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Are you ready to simplify your small business finances while taking advantage of the best banking perks? Having multiple bank accounts for business can help you do just that.

In addition to keeping your cash safe from bank failures, having ‌multiple small business bank accounts can provide you with a streamlined system that makes budgeting and tracking expenditures easier. In this article, we’ll explore the pros and cons of managing multiple accounts.

When to open multiple business bank accounts

Keeping your personal and business finances separate is important, but separating your business finances with multiple accounts can have its advantages. Here are four reasons you should consider having multiple business bank accounts: 

To separate expenses

By having separate accounts for your business, you’ll be able to track expenses and keep better records of your finances easily. You can open multiple accounts that have distinct purposes. For example, you can open one account for operating costs and another for payroll. 

To earn interest

If your business tends to have extra cash on hand, you may consider an account that will pay your interest. This can include business checking accounts and savings accounts. Such accounts can be useful for savings or emergency funds. 

To manage different goals

Setting up multiple checking or savings accounts can help you allocate funds to specific goals. For example, you can reserve and save money for a short-term goal, such as equipment upgrades, while also having an account for long-term necessities like new equipment purchases. 

To protect against bank failure

Setting up separate business accounts also means protecting yourself from bank failure. If your bank has Federal Deposit Insurance Corporation (FDIC) insurance, your cash is safe as long as you don’t have more than $250,000 in the account. Opening multiple bank accounts for your business—at different banks—allows you to get the same insurance limits on multiple accounts. 

Pros of having more than one small business bank account

One of the biggest advantages of having multiple business checking accounts is managing and monitoring cash flow easily, but it can also bring other benefits. Here are the top three advantages of opening multiple business accounts: 

Keep your cash safe

Staying safe with your cash is an important part of managing your small business finances. Multiple bank accounts for business can protect you from bank failures and security concerns, like: 

  • Identify theft 
  • Hacking 
  • Cyberattacks 
  • Theft

Placing your money across multiple accounts can help protect your business from fraud and cyberattacks. If you experience a cyberattack on one account, having multiple accounts increases the likelihood that you’ll still have access to cash through your other accounts. 

Additionally, having multiple accounts can make it easier to monitor and flag any suspicious activity or unusual activity that could indicate fraudulent activity.

Take advantage of perks

Earning interest on your bank account is just one perk you might find with another bank account. You may also get access to other perks, such as: 

  • Payroll services
  • Payment processing 
  • Expense management
  • Check writing 

Having a relationship with various banks may also help you gain access to their other products, such as credit cards or business loans. 

Streamline business finances 

One of the primary advantages of maintaining two or more business bank accounts is the ease of managing your finances. Multiple accounts can make it easier to identify shortfalls in your finances. 

For example, say you have an operating and payroll checking account. You can see if your payroll bank account is short for the current payroll cycle without having to account for operating expenses that might come through. 

Cons of multiple bank accounts for business

Having multiple business bank accounts may sound like a great way to streamline finances and take advantage of certain perks, but it can also come with some downsides. Here’s a look at the top three:

More fees

One of the biggest issues with multiple small business bank accounts is costs. You may need to pay monthly fees for each account and potential fees for transferring money between them. These fees could take away from any money you’re making or savings you’re getting from these accounts.

Greater security risks

While it’s great to have multiple bank accounts, you’ll want to make sure they are all secure. Having multiple business bank accounts can also increase your cybersecurity risk.

Multiple accounts with different banks will mean additional logins and passwords to manage. It’s wise to avoid using the same password across your different accounts, but that can make managing accounts more difficult. 

More time to manage

Finally, you should also consider how much time and energy it will take to manage multiple accounts on an ongoing basis. While having multiple accounts can often make life easier, it does add more complexity when dealing with financial matters in the long run. You’ll need to track multiple accounts and balances. 

Accounting software can supercharge your ability to manage multiple accounts and spot cash flow issues—especially if it integrates with your bank. 

How to set up and manage multiple business bank accounts

Businesses looking to set up and manage multiple bank accounts can make the process easier with these tips: 

Learn the different account types

There are five primary types of bank accounts you’ll likely encounter—and want to consider:

types of bank accounts

There is no limit on the number of bank accounts you can have. For example, you have multiple checking accounts that serve different purposes.

Give each account a purpose

When managing multiple business bank accounts, it’s important to give each one a purpose. For example, you may want a checking account for day-to-day operations and a savings account for long-term goals like investing or building an emergency fund.

You can open accounts for all sorts of purposes, such as:

  • Operations: Paying for daily activities to run the business
  • Payroll: Paying employees 
  • Taxes: Paying tax payments, such as sales tax or quarterly taxes 
  • Customer payments: Collecting money from clients or sales 
  • Savings: Putting money away for bigger purchases or in case of emergencies 

You can also set up multiple bank accounts to have an account for each department or for paying specific vendors. By having designated accounts for different types of transactions, you can monitor your spending habits and ensure you’re using money in the most effective way possible.

Link them to your accounting software

To make tracking your business bank accounts easier, link them to your accounting software. When setting up a new bank account, you’ll want to ensure it integrates with your current accounting system. 

By connecting each account to your accounting software, you can keep track of all your financial transactions in one place. This can help you stay on top of your expenses and keep your books up-to-date. 

Choose the best banking setup for your business

The recent bank turmoil makes having multiple bank accounts for business more appealing. Ultimately, having multiple business bank accounts can be a great way to take advantage of certain benefits, but it’s important to consider the cost and energy involved in managing them. 

This article originally appeared on Quickbooks and was syndicated by

5 tips for organic business growth

5 tips for organic business growth

It’s no secret that startups have a prodigious failure rate. In fact, according to a recent study, the four-year survival rate for a startup is just 49%.

With demoralizing stats like this in mind, entrepreneurs may be tempted to grow their profits through any means necessary, including inorganic strategies like acquisitions or mergers. However, the truth is that business owners can achieve impressive growth through organic strategies as well, allowing them to retain control of the companies they built from the ground up.

Also known as “true growth,” organic growth refers to the process of growing a business by reducing costs and increasing sales, either by finding more customers or enhancing output to current clients. On the other hand, inorganic growth occurs when a company merges with or is acquired by a second business. Entrepreneurs should take the time to familiarize themselves with the advantages of organic and inorganic growth, as well as some of the top strategies for execution, so they can decide which is the best choice for their business.

As a new business owner, you’ll likely want to increase profits as quickly as possible. By employing inorganic strategies like mergers and acquisitions, startups can grow their businesses more quickly while taking advantage of resources such as stronger credit lines and expanded market resources. Additionally, joining with another company lets you take advantage of its expertise and experience in the industry to develop your own brand.

By merging with another business, you agree to hand over some of your control and equity to another company. Not only can your initial vision become diluted, but you may also be forced to take on new business and managerial challenges before you’re truly ready. In some cases, you may have to rush to grow your staff and production capabilities to keep up with demand.

On the other hand, organic growth techniques allow you to grow your business on your own timeline. Because you aren’t sharing control with another company, you can hire employees and expand sales at your own pace. Additionally, entrepreneurs who maintain their autonomy now can sell for a larger profit later when the company is fully developed.

While retaining control of your company offers many advantages over the long haul, it can make business growth challenging in the short term. Some entrepreneurs struggle to grow beyond their current marketplace, while others find themselves cut down by the competition. Additionally, new businesses must often fight to make ends meet from month to month. Fortunately, strategies exist to help startups grow their profits without handing over control to partners or investors.

Here are just a few of those strategies to help you grow your business organically:

Want to grow a business that will feed your family and employees for years to come? The first step on the road to entrepreneurial success is starting the right kind of company.

With home-based and e-commerce businesses, you can avoid expenses like rent and commuting during the early, lean years of your company. As an added bonus, working out of the home lets you write off parts of your mortgage and electric bill. You can then invest these savings back into the business to help you grow in the long term.

A common conundrum for new business owners is whether to take your full cut of the profits or invest the money back into your company. While you may be tempted to keep some of those hard-earned dollars for yourself, you should aim to reinvest gross profits whenever possible to help your business grow. Investing your own money shows prospective clients and lenders that you are confident in your company’s long-term potential.

Not sure where to put profits? When in doubt, invest in marketing, SEO and other tactics likely to generate more business for your startup. If your income permits it, you may also want to invest in employee training and technological improvements, as these can yield large profits down the line for your company.

No matter how happy your current clients are with your offerings, you will have trouble growing your business organically if you don’t put effort into finding new sales channels. If you don’t currently sell your goods online, you should definitely consider starting a website to expand your reach to other regions. Additionally, you can introduce new products, cross-market services to your existing clients and expand to different markets. For example, a company that specializes in SEO may want to expand its services to include social media and search engine marketing.

Finally, business owners should employ market segmentation to customize their strategies according to the specific channels they are leveraging and the specific markets they are trying to reach. This way, you can create unique campaigns based on customer location and demographics and watch your sales rates skyrocket.

As a new business owner, you may feel the urge to micromanage everything that happens at your company. However, the truth is that macro-management is a far more effective way of enabling organic growth for your startup.

To keep your company moving forward, you should train top employees to take over some of your daily responsibilities. While you may be tempted to keep costs down by hiring employees who will work for less, in the long run these staff members could end up costing you more if their efforts aren’t up to par. Find people you can trust to get the job done—even when you’re not around—so you can focus on growing and developing your business in the years to come.

From minimizing spending, to reinvesting profits back into the business, organic growth strategies help ensure that you will retain control of the company you worked so hard to build. Do your research, and consider all the growth strategies available in order to give your business the best shot at success.

Do you know how sales taxes are impacting your bottom line? Check out our sales tax calculator.

This article originally appeared in the QuickBooks Resource Center and was syndicated by

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