Do You Have A Business Savings Account?

Do you save money as part of your business finance system? (Do you have a system?)

Saving money as a business isn’t talked about very much.

Saving money on what you spend now, that’s talked about. A lot!

But who talks about saving money for future costs and investments?

  • For paying yourself when cash flow is low?
  • For paying bigger bills (tax bill anyone?)
  • For preparing growth and a limited company?
  • For investing in courses, mentoring and coaching?
  • For when you start your business and before?

Today I’m talking about how you can start saving for your business simply and easily and make life a lot less money stressful (it’s also one of the best ways to upgrade your money mindset for the long term).

 

Why Have A Business Savings Account?

A savings account for your business is one of the business finance basics, right after a separate bank account.

If you have a business bank account already, it’s easiest to open a business savings account with your current bank.

If you use a personal bank account for your business, you can open a separate personal savings account for your business (I’m not saying it’s permitted under the terms and conditions but people do it).

If you don’t have a separate bank account for your business, and it’s all mixed up with your personal money, open a separate bank account first. One, it makes your tax return so much easier. Two, you’ll need a separate account with Making Tax Digital.

 

You don’t need a separate savings account for each savings goal

You don’t need a separate savings account for each reason you want to save (paying yourself, tax bill, preparing for growth, investing in mentoring and coaching, when/before starting a business).

It is a good idea to know how much you are saving for each saving goal though so it’s not just a lump sum with no focus in an account (which is easier to spend).

A basic spreadsheet or notes in a notebook or app like Evernote or your phone are great for keeping track.

 

Business Savings To Pay Yourself

All businesses have times when cash flow is low, it’s just a thing.

The real issue is how good your planning for this is, so it’s ‘move money time’ rather than ‘I can’t pay the bills time’. The first is a nip into your bank account and a few clicks, the other is serious stress.

This isn’t for cash flow blips, it’s more for times of unexpected low income.

Unexpected doesn’t mean unpredictable. For example:

  • You’re ill/unable to work for several months
  • A loved one is ill/unable to work and you need to care for them
  • Bank problems so you don’t receive a big payment when expected as your client’s bank payment system goes down (if you think this is unlikely, remember Natwest’s problems a few years ago that lasted for weeks?)
  • Your launch fails because your website goes down and can’t be fixed for weeks (or it’s hacked)
  • Seasonal income variation (e.g. your business receives 70% of its annual income in December or you take the school holidays off)

These kinds of savings are more than ‘only’ paying yourself (and your team) if there is a problem (or seasonal variation).

It’s peace of mind and good planning of your business finances.

That’s what makes the difference when you’re preparing for growth, exploring upgrading from sole trader to a limited company and want to pay yourself on a regular basis.

It’s even more essential if your business is a limited company and you take a salary.

For more on getting paid:

Getting Paid As A Sole Trader

Getting Paid As A Limited Company

Demystify Limited Companies Workshop

If you’re interested in working with me one to one, book into my calendar for a chat about Prepare For Growth Mentoring.

 

Business Savings To Pay Bigger Bills (Tax Bill Anyone?)

Do I need to explain this one?

Your business profit will be taxed.

If you’re a sole trader, the first time you pay may be 18 months of tax at once (it’s called ‘you did real well’ and Payment On Account).

It’s one reason doing your self assessment earlier is a great idea as you’ll know your tax bill ahead of time and you don’t need to pay the bill until 31 January, whenever you filed your self assessment.

 

Rosie’s Top Tip:

If you have a full time job as well as your business, it’s even more important to do your tax return/self assessment earlier as it means you have more options for how to pay)

What Is Payment On Account?

Tax Return Success group coaching

 

It’s so important for your stress levels that you have the money to pay your tax bill when it’s due.

It’s the best reason to have a savings account for business and it’s saved the bacon of more than one of my clients after they followed my advice.

Ideally, you want to be putting 50% aside and a minimum of 20%.

If you really can’t do that, do what you can and start working on self care for your business finances as a priority. You can’t grow as a business if you’re stressed about a tax bill.

Self Care For Your Business Finances Retreat and Resources Pack

 

This applies as much for you if you have a limited company as for sole traders.

Ask your accountant to help you plan your tax bill so you know how much to put aside for corporation tax and dividend tax.

 

Business Savings To Prepare For Growth

Preparing your business finances for growth isn’t talked about much either and yet it’s key.

If you don’t have sustainable financial systems in place, how can your business grow and flow?

  • Basics like paying yourself on a regular basis in a way that works for you (and is legal and ethical).
  • Having the financial resources to even out cashflow, seasonal variations, the unexpected, late paying clients, accounting systems and the constant tax changes
  • Feeling you’ve prepared for the chaotic nature of growth

You may be a sole trader growing into a limited company.

You may have a growing limited company and it’s time to understand the financial behind the scenes.

You need savings in place for salary, uneven cashflow, more costs with relative lower income.

If you’re interested in working with me on this, book into my calendar for a chat about Prepare For Growth Mentoring or find out more about the Demystify Limited Companies Workshop.

 

Business Savings To Invest In Mentoring, Coaching and Courses

Hands up who has wanted to invest in a mentor, coach or course and doesn’t have the funds when you need it?

How frustrating is that?

Especially when you feel you’re ready and the timing is right.

Savings like this is like having food in the fridge instead of running out of food before you buy more.

It’s taking the day off on your birthday instead of working like a normal day.

It’s also probably the most fun way to start saving for your business and the easiest if you’re not used to it.

Fabulous person I want to work with who will help me get more in flow and help me grow my business? Absolutely, let me just transfer the money from savings. And done.

 

Business Savings When You Start Your Business And Before

I want to cover a few reasons why you might even want to start saving for business when you have a new business and before you start your business.

Why save for your business when it’s new:

  • Tax and Payment On Account. I have seen so many women have the shock of an 18 month tax bill they didn’t expect. Don’t let this be you
  • You start good habits straight away. It’s a lot easier than sorting it out later
  • It’s easier to prepare for growth later on when you start with basic solid financial systems
  • It’s easier to curb over spending on what doesn’t really matter because you’re more aware of what’s going in and what’s going out
  • You have the money to invest in the support you need for the first few years when everything is new

Getting Paid: Saving For Tax & Your Future

If you’re interested in working with me one to one, book into my calendar for a chat about Start Your Business Mentoring.

 

Why save for your business before you start:

  • Money usually starts flowing out before it starts starts flowing in (this is normal)
  • It’s easier on you to have a specific amount of money you loan your business at the start, to be repaid when you’re able to do so
  • It saves time, money and stress to loan your business a fixed amount rather than bits and pieces all over the place (although that can be sorted out if it’s already happened)

Getting Paid: Starting A Business

If you’re interested in working with me one to one, book into my calendar for a chat about Start Your Business Mentoring.

 

Hi, I’m Rosie Slosek.

I mentor women to get clear about their business finances so their creativity flows & their business grows.

If you’re a woman entrepreneur – or want to be – and you want to get clear and confident about your business finances, book a chat with me to explore how we can work together.

You find out more about me here.

Rosie x

 

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