How to Decide the Bank Accounts You Need

by | Jul 25, 2022 | Cash Management, Profit First | 0 comments

Implementing Profit First in your interior design business can feel overwhelming. 

All of the new information may have you feeling like you’re trying to drink water straight from a fire hydrant. Usually, situations like this merit advice such as “take it one step at a time” or “start small.”

And while we do believe that’s valuable advice, we have a slightly different perspective to share. 

One of the best things to do at the beginning of your Profit First journey is to go all-in. Create as many bank accounts as you need to have a clear birds-eye view of where all of your money is going. 

This is one situation where starting small will not serve you best! Open these bank accounts as soon as possible, before you do anything else.

There are at least 5 checking accounts that are crucial for starting this bookkeeping for interior designers system and starting it well – and while that may seem like a lot, it pays off in the long run. 

The 5 accounts any business owner should start out with are:

  1. Income 
  2. Profit 
  3. Operating Expenses 
  4. Owner’s Pay 
  5. Owner’s Tax 

These are great building blocks for any business. They’ll allow you to let your income trickle into one bucket, and then you can make appropriate allocations from there. 

When you’re setting up these accounts, take time to consider if there are other accounts you may need to open, due to the nature of your work and your goals. 

As an interior designer, you’re making significant purchases for your clients. Materials like couches, curtains, and artwork aren’t cheap! And neither are the subcontractors you may hire, like painters or woodworkers. 

These are huge areas of your business that deserve their own accounts. This is usually called your “mats and subs” account and can serve as a home for money specifically set aside for materials and subcontractors. This will provide you with an extra “safety net” to make sure you aren’t borrowing money from yourself to pay for these services. 

These foundational accounts are great for getting started in accounting for interior designers, but don’t let this list limit you. Your unique business could have needs that these 5 accounts don’t cover, and you may need help discerning how many accounts to open in light of that. 

A scenario where you would need an additional account that’s unique to your business could look like this:  

Say you want to hire an assistant as your business grows and becomes more demanding. You could jump right into the deep end and hire this person with your fingers crossed that you’ll be able to pay them well, without hurting the rest of your budget. But if you work with AccountSolve, we’ll advise you to go ahead and open a bank account exclusively for that new position – before you hire them. 

Have a trial run where you put money into the “assistant account” each week. If you struggle to make ends meet with this added expense, you’ll know exactly what kind of adjustments need to be made in the rest of your accounts before you can feasibly hire that person. Or if the trial run goes off without a problem, you can confidently know that you’re ready to hire your new assistant! Whether you’re opening new accounts for the first time or you need help discerning what your smartest future financial decisions may be, AccountSolve is here for it all. We’ll work through these questions with you and create a game plan for your business’s financial needs.

Schedule a call today for that extra clarity you’ve been looking for.

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