Recommended Account Setup for Business Owners
Banking Setup
This article documents the standard bank account structure we recommend for businesses in California.
Use this as a reference when reviewing your setup or starting new entity.
Banking Accounts to Open
Most NCO clients operating with revenue under $500K/year set up 2 business bank accounts.
This is the simplest set up to reduce admin for the business owners while still staying compliant and helping to manage cashflow effectively.
- Operating Account: Where revenue comes in and business expenses are paid out of. This is the main account connected to QuickBooks and should be separate from your personal account to avoid risks with the IRS.
- Credit Card: A credit card to pay larger expenses, and manage cashflow more efficiently.
When to Add Other Bank Accounts
For businesses making more than $500K/Year - additional bank accounts start to become more impactful.
Examples include
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Tax Account: To separate quarterly taxes from your operating account to ensure you have enough to pay the IRS and FTB.
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Payroll Account: To separate employee payroll (and business owner pay) from other expenses so you know can prioritize paying your people.
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Savings/Investment Account: Good idea for business owners with high levels of profit in the business.
FAQs
Can I add my own accounts in QuickBooks?
Check with NCO first. Adding duplicate or incorrectly structured accounts affects your reports. If you need a category that does not exist, contact NCO and we will add it.
What if I already have accounts set up before onboarding?
NCO will review your existing setup at onboarding. We keep what works and clean up anything that would create reporting problems.