5 Types of Business Bank Accounts A Sealcoating Company Needs
Losing track of your finances can happen when you’re juggling buying supplies and equipment, working with clients, completing projects, and managing employees. Before that ever happens, don’t just open one business bank account. It would be best to have these five business bank accounts for smoother and easier income and expenses tracking.
1. Income Bank Account
The first type of bank account you should have for your sealcoating company is an income bank account. As its name suggests, this is where all your business’ generated income or sales will go. Remember that this is the first point of deposit before you transfer and divide a percentage to other business bank accounts we will discuss.
But why should you have an income bank account when you already have personal savings account, you ask? There are several reasons why a separate income bank account can help you:
- More professional. Giving up your personal account details can put some prospects uneasy. But if you have a professional income bank account, you assure them that they are transacting with a legitimate business.
- Avoid mixing personal and business transactions. There is always a huge probability you may use your personal money for your business or vice versa. By having two separate accounts, you can minimize this nightmare.
- Hassle-free tracking and tax preparation. No more chaotic backtracking of income. You and your accountant can easily streamline and track all the incoming and outgoing money and have a perfectly balanced book.
- Easier preparation for a partnership. If, in the future, you will partner with another company, having a separate income bank means you can present your business’ sales with ease.
Now, should you get a checking or savings income bank account? We highly advise getting a business checking account provided that it has 0 or low monthly fees. If possible, also look for a bank that doesn’t have a minimum balance requirement and offers unlimited no-fee transactions.
2. Operating Expenses (OpEx) Bank Account
Once you have your income bank account, the next account you should open is an operating expenses bank account or OpEx, in short. This type of bank account, as its name suggests, is for your company’s day-to-day operational expenses such as:
- Equipment repairs
- Accounting fees
- Rent and utilities
- Employee salaries/payroll
- Insurance costs
- Legal and license fees
- Marketing and more
- Asphalt supplies and equipment such as crack fillers, and sprays systems
For taxes, you shouldn’t include them in your OpEx bank account. A tax bank account is more appropriate to have and use.
If you’re struggling to manage your expenses, having an OpEx bank account can help you stick with your budget. It can also keep you on track regarding filing taxes - especially if you already have separate accounts for sales or income and expenditure.
3. Net Profit Bank Account
After deducting the expenses from the income made, where will the profit go? It will go to your sealcoating company’s net profit bank account. Having this type of bank account lets you know if your business is really earning money or you’re breaking even. With a net profit bank account, you can also access if you’re operating at a loss. And, again, you can just open a savings net profit bank account.
4. Tax Bank Accounts
As mentioned before, taxes shouldn’t be in your expenses account. Instead, you should set up a separate tax bank account. This is a must-have, especially when you’re filing taxes without an accountant’s help.
5. Owners Compensation Bank Account
If you notice in the OpEx section, we’ve only included your employees’ payroll and not your salary. This is because it will go into the owners compensation bank account.
There are two ways that you can compensate yourself.
First, you can use the draw method to get a certain amount of money from your earnings. It can be a small or large percentage - you should be compensated as you see fit. The second way to compensate yourself is to set up a fixed monthly salary - just like how your employees receive their payroll.
Either way, you should never forget to compensate yourself!
Need More Help?
We have plenty of other valuable resources at Action Seal about starting and running a successful sealcoating company. We have a guide about getting more referrals, essential asphalt surface preparation tools, and more! If you have questions or want to know more about sealcoating products and equipment we’re offering, give us a call at (855) 554-4386.