THE FIVE BANK ACCOUNTS you need for your LLC

what's up guys it's prince dynel founder of jumpingjack tax and the jack franchise and today we're going to be talking about the five bank accounts that you should set up when launching your business your llc these are the five bank accounts that i recommend just my opinion by the way but i think it has a uh a great way to give you the organization that you need for your business and also allows you the opportunity to scale so i'm excited to have to talk about that today on this video make sure you like comment and subscribe if you love this video if it provided you with valuable information and also recommend this to a friend to another uh new entrepreneur business owner so that they can be on the right track when it comes to their finances let's get into it first things first i think it's very important to understand that as soon as you establish your llc you need to set up separate bank accounts immediately away from your personal accounts this is very important because we have so many clients that come into our office and we ask them are you running business transactions through your personal account or are you running personal transactions through your business account and they're mixing the two that is a means for disaster and if you're watching this video i know you did it a few times because in the past i've done it look i get it sometimes it's easy to do and it's it's like it's out of sight out of mind but i can tell you now it's going to lead to problems in the future some of those problems could be the fact that you're not going to be able to trace back transactions that you've made that that could that could actually be tax deductions um that could be write-offs and you can't even trace it back anymore because you ran them out of accounts that you shouldn't have secondly um what happens if you're audited by the irs and they see that your books are a mess that's going to that's going to now give them a feeding ground to keep looking further into your books to find mistakes right the irs tends to not mess around with people who are more organized who have who have more who have cleaner books who are being represented by a tax professional by an accountant right they they tend to not mess with those individuals because they know it's going to be harder to find things but it's easy when they can find somebody like yourself who is not organized they know you don't know what you're doing you don't know tax law your books are a mess man i can promise you you're going to be paying thousands of thousands of thousands of dollars please don't do it to yourself set up separate accounts and i need you to make this a rule the rule is i would only run business transactions out of my business account and i will keep everything personal and if i need money from my business account to do personal things then if i have a single member llc i'm going to write a check from my business account and send it to my personal account and if i have an s corp i'm going to run myself payroll you are not to run your business debit card for a personal transaction i need you to make this a rule please okay now that we have that established let's move into the five accounts that you're going to be setting up once you actually get your llc established so you're going to go into the bank you're going to have all of your documents and information and you're going to give it to the banker and the banker is going to you're going to say banker i want to open up some bank accounts i've got a few here that i want to open by the way you can open up as many accounts as you would like some banks do have minimums when it comes to opening up business bank accounts some do some might only have a 25 minimum or et cetera um just do your research on the banks because if you don't have a lot of liquid cash to be able to fund each of these accounts that i'm about to explain you don't want to get hit with unnecessary fees bank fees because you don't you're not able to hit the minimum so just do a little research in your area sometimes local banks are a little a little easier i will tell you that the issue though with going to a local bank is that a lot of times when you start to scale in business if you have a local bank and they're not open at the time when you need to actually handle a business transaction well that could end up being a problem so me personally uh i kind of like bigger banks and i like to have some money in a bigger bank some is smaller all depends just just so i'm not caught up in a situation in the future where i need money and the small local bank is not open okay so the first account that you are going to set up is your operating account this is going to be a business checking account it's going to be called your operating account i want you to label it as operating account so tell the banker i want to open up a business checking i want it to be called my operating account this is going to be the account where you're where you're running all of your bills out of and you're running most of your this is where most of the volume of your transactions are going to come from so you go to staples and you want to pay for paper pins and etc that's all coming out of your operating account this is also probably this is also the account where all your money is coming into so all your money's coming into that operating account all of the miscellaneous bills and and like your email and all the things that you need to run the business that's all coming out of that operating account money in money out right standard account that you have it's a checking account okay very simple money comes into that account all your bills and everything comes out of that account okay it's your operating account now let's go on to the second one your second account that you're going to open is a reserve account a business savings account okay or it can be another checking account depending upon the fees that the banks charge because sometimes business savings account carries certain minimum but um you want to open up a uh a reserve account what is this reserve account used for this reserve bank account is when at the end of each week or at the end of each month depending upon your cycle and how much cash flow you have coming in at the end of that month you should be doing a profit loss meaning okay here's how much money came in ten thousand here's how much money went out five thousand i now have five thousand dollars left over in profitability with that 5 000 leftover and profitability i want you to make it a habit to where a certain percentage of that money that you have you're putting that into a reserve okay for some of you you might be able to afford to put 10 percent some of you might be able to afford to do 20 30 40. it all depends upon your comfortability level and the amount of overhead that you have i don't know but let's just say that it was that it was 10 so if i have five thousand dollars i'm going to take if i got five thousand in profit i'm gonna take 10 or 500 and i'm going to put that into my reserve what is my reserve used for that is what i consider a deep savings account meaning that if things hit the fan i have funds to the side that i'm able to go to in the event that another uh crisis like the pandemic that just happened that caused a massive amount of businesses to go out of business amount of businesses to fail and to go out of business have to close their doors in the event that something like that were to occur i have a deep savings i have a reserve to be able to cover me that is important because i promise you you're going to run into hard times the economy is going to turn and when it does the companies that are sitting on enough cash are going to be able to remain uh are going to remain alive the companies that don't are going to they're going to perish i don't want that for you so have a reserve account set up take a minimum of 10 put that into that reserve never ever ever ever ever touch those funds ever it's not ever to be touched unless an emergency happens and it's a catastrophe okay so you're gonna have your reserve account set up that's number two and i want you to label it as reserve the third account that you're gonna set up is your tax account okay this could be another checking account um business checking that you set up your tax account now this is important because of the fact that now that you're a new business owner you're you just establish your llc now on the profits that you earn you're going to have to pay taxes on the profits okay now a lot of times it's it's it's easier for you to now know how much that you're possibly going to have to pay in tax and then you want to put that money into that tax account so that when you get the bill at the end of the year or if you're paying your taxes quarterly you have the funds there inside of that tax account i have a video on youtube to talk about how you can calculate out your actual tax bill because it it depends so i will watch that video on my youtube i think it's um how to pay yourself as a single member llc or i think i have another video on um the difference between llc and s corp and i break down how to actually calculate out your taxes i won't do that on this video but you want that tax account set up because again with those profits that you earn you want to take a certain percentage of that and you want to put that into the tax account so that if you get your tax bill you have the ability to write the check and pay it so now you're not at the end of the year like damn i got a tax bill i can't pay it now you're getting hit with interest and penalties by the irs because of the fact that you owe them money set up your tax account transfer the money there the next account that you're going to want to set up is your marketing account this is important because i see so many new businesses that open and you don't got any money for marketing you're never going to win if you don't got money for marketing we spend thousands of thousands of thousands of thousands of dollars every single month on marketing here jumping jack tax with our franchise thousands of dollars that is important because it's the only way you're going to be able to start gaining market share for you to scale so with that profit you're not about to spend that profit on a rolex you're not about to spend that profit on a new chain you're not about to spend that profit on the car you can't even afford that just because your business made 5 000 in profit your business needs to be paid first so take a certain percentage of that and you're going to be again a minimum of 10 or more and you're going to take that now and you're going to put that into your marketing account now now that marketing account at ten percent has five hundred dollars now that they got 500 bucks now you know going into the following month i got 500 to spend on marketing now because i took it from my profits from the previous month and now as the business starts to generate more profitability that ten percent that you're putting toward marketing in that marketing account it grows now that you made ten thousand now you might have that you have a thousand dollars now that you have for marketing next month and over time it begins to multiply where now you can have a couple thousand dollars a month spending on marketing now that you're that you've literally put into that particular account okay um or you could use that that money for marketing now to hire somebody to handle your marketing for you to be able to hire social media uh experts or social media managers or et cetera you have to budget to do it so please set up that marketing account and take a percentage of your of your profits and dumping into that marketing account so you can spend that every month and by the way the money that's inside of that marketing account as long as you're spending it it's a tax write-off so if you put more of your profits into that marketing account then you guys then you're you're gonna put less money into your tax account because you're actually spending the money on marketing which is a tax write-off so now i don't got to pay taxes on those profits right so had that marketing account set up and then lastly which is one of my favorite accounts that i set up i set up an innovation account again this could be another checking account that you set up you're going to label it as innovation what is an innovation account basically what that means is that your business should be constantly looking to develop new products or services it should be constantly looking for ways to to to to uh to change the future right people customers like companies that are that are that are forward thinking okay that are that are researching and finding new ways to change the marketplace this is important if you want to scale so with that innovation account that you have you're going to take a percentage of that 10 minimum drop it into that innovation account now that you have the money in the innovation account sometime throughout that year you might say to yourself you know what i'm thinking of us launching a new product i'm thinking of us launching a new uh launching a new service that we have for our customers but it's going to cost let's say three grand in order to launch this new product or launch this new service now you have the money in your innovation account that you've been building up over the course of months because you've been taking it from your profits and you want to do this before december 31st why because you want to try to spend down all of the money that you have by december 31st on your business so you don't got to pay any taxes on the profits so you take the money from the innovation account and say now that i'm going to launch this new product or service i have the money in my innovation account to spend i have the funds to do so let's let's go through this process again you're gonna have your operating account where money comes in and your regular bills come out right that you need to operate the business which then now at the end of each month you'll have you'll have a profit a profit right if that profit is five grand now you know i got five grand to work with here now that i got that five i'm going to take 10 of that money i'm going to put 10 percent into my reserve account and i'm never going to touch it i'm going to act as if it doesn't exist right i'm going to take another percentage of that i'm going to put it into my marketing account now that marketing account is what i'm going to use next month in order to finish to continue marketing my business so i can get more market share i'm going to take another percentage of that i'm now going to put it inside of my innovation account i'm going to use that innovation account from here to be able to uh find new products or services to launch into the marketplace from there and then i'm going to take that last percentage and i'm going to put that into my tax account again watch one of my previous videos to understand how to calculate the tax side of things and from there you'll have that in the tax account so then you now when you get that tax bill you have the ability to pay you operate like this that gives you more organization it allows you to know how much you have the ability to spend in each division of your company i look at these like division innovation is the division marketing is a division the tax side is a division your operating account is how you're moving and your cash flows these things right when you look at this from a bird's eye view as a uh as an executive as a ceo it gives you a clarity so now you're not just like i got 5 000 here and i'm about to just be throwing money that way throw money that way throw money that way that's no way to run your business throwing money all these different places you're going to go out of business faster than you can that you can even say we're open if you don't want to do that set up those accounts create structure around the business in the very beginning when you start and you're going to have you're going to have a better chance than about 95 of people who are going to watch this video and literally not do anything that i say and a year from now they're going to be out of business i promise you i promise you so please set those up set up that structure and you're going to be good to go in your future again like comment and subscribe if you like this video share this with another entrepreneur a friend comment below let me know what you think about this video if you're going to use this strategy from here and best of luck with you and your future business and if you need your business taxes done then of course you can come to jumping jack tax download the jumping jack tax app you'll be able to find one of our uh one of our uh our tax professionals on our app and uh they'll be more than happy to serve you and be your uh your representative for years to come peace

Channel: Prince Donnell

Views: 322,441

Rating: 4.9633179 out of 5

Keywords: bank, prince donnell, cpa, financial, llc, scorp, profit firtst, save money, make money, how to start a business, money advice, dana chanel, jumping jack tax, top 5 banks, wells fargo, pnc, bank of america, taxes, pay your taxes, ppp loan, entrepreneur, money tips, forex, stocks, Investments

Id: -pb0QYk8ht4

Length: 16min 19sec (979 seconds)

Published: Tue Jun 01 2021