I don’t know any successful business owner who isn’t following this principle. It’s the only way you can control the flow of cash in and out of your business.
Its not uncommon for those starting out to only have one bank account which can lead to a whole bunch of cashflow challenges down the line when it comes to meeting your tax and team liabilities.
Often we find that business where cashflow is tight, the money accrued in liabilities for the ATO and for your employees superannuation, is not set aside regularly, meaning a massive hit on the trading account when it comes to reporting time.
Tax and Team Liabilities Account
Interestingly, the government is noticing this too. Thats why they’ve implemented payday super. From 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages. Its probably also why the ATO saw tax debt double between 2019 to 2023 up to $52.4 billion. Yes you read that right.
As a business owner, the more you can stay ahead of liabilities for tax and super, the better placed you’ll be to manage your cashflow and you’ll end up with a higher credit rating if you’re looking for financing.
You can also use this account to accure long term expense amounts – quarterly or annual payments that you can contribute to over the weeks to manage the cashflow on these bigger expenses.
Trading Account
Often the trading account is your main account where money from all activities flows into. You’ll want to manage the outflows so keep a watch on direct debits and subscriptions coming out of this account. This is the account where you’ll transfer money to other accounts from.
Emergency Account
I’ve never met a business owner with an emergency account who wasn’t pleased they had it. This is the sleep easy account. Keeping an allocated amount in the emergency account helps to create a safety net for your business in the event of late accounts receivable payments, unexpected expenses, or other emergency needs. It may take time to build up but set a target and keep at it.
Tip: emergency needs to be defined for you – this is not a dip into every other week account.
Cigar Box/Garden
What’s this one? This is the stash of cash you have – yes – actual cash – in a SAFE place. This means you can have some cash on hand in the event of any banking issues.
The fun one: The profit account
This one is a one way account only meaning money comes FROM the business as profit, and does not go back into the business. It means at the end f the quarter or year, you have actually got profit in the bank to show for your efforts – not just numbers on your P&L. Ideally, you’ll take a percentage of revenue and put this across FIRST each week or month (depending your cashflow cycle). Profit account leads to being wealth rich. Its where we can mobile the profits from your business into wealth generating activities like investment purchases, shares or buying a second business, not holidays and shopping trips (even though they are a worthy investment too, they’re not designed to be taken from the profit account).
Great business owners get this right and stick to it. Let us know how you go 💰
Cheers
Sutto
