Why You Need 5 Bank Accounts for a Profitable Business

Author: Brunning & Company Chartered Professional Accountant |



When you are setting up your business bank accounts using the Profit First System, you are going to see that you need a minimum of four to really make things work.  However, I prefer to use five bank accounts, because it truly allows you to see where your money is and where it is going each month. Plus, it is more difficult to take money from one allocation and use it for another! 


The Designations for Your 5 Bank Accounts with a Profitable Business


Owner’s Pay
Tax Expenses
Operating Expenses


On the 10th or the 25th of the month, you will still put all your earnings into your Income bank account.  Once the money is in there, it is time to allocate percentages of it to each of the other bank accounts that you have open.  All of your profit will go into your Profit bank account, owner’s pay into your Owner’s Pay account, and so forth.  



Since the money will be in different accounts, you will not be tempted to use your owner’s pay to cover those extra bills one month or cut down on your profit margin.  This ensures that you are continuously getting your paycheque on schedule and have the option of drawing bonuses when your profits reach a certain level.  


While I recommend that all profitable businesses have five bank accounts, you may eventually find that you want even more.  This conclusion may be determined when you realize that you have numerous annual expenses or you now have team members and need a payroll account. Instead of including those expenses into the other categories, and taking the chance that you will not use the money as you should be, you can give it its own account.   


Once you have the original five bank accounts, it is simple to open one, two, or even three more to meet your future needs.  Plus, since you will be a pro at the Profit First System at that point, it will be easy to make the adjustments to include these extra bank accounts.  


If you are ready to make your business profitable, give me a call, so I can show you exactly what you need to do to make your dreams a reality.