What Types of Business Accounts Do I Need?

Profit First Austin, TX

Are you jumping into Profit First with both feet?

A common question I receive from business owners is, "Which Profit First accounts should be checking accounts and which should be savings accounts?"

It is important to understand the difference between a checking account and a savings account. As a general rule, savings account yield interest, but are limited in the number of withdrawals (usually 6) during the statement period (usually a month). A checking account typically offers an unlimited number of withdrawals and checks, but does not yield interest.


Since Profit First encourages the 10/25 rule (allocating funds and paying bills on the 10th and 25th), for most businesses, all accounts except for operating expenses can be savings accounts.

Note that a savings account can't write checks, so owner's comp, tax, and profit won't be able to to issue checks.


Following the 10/25 rule, the income account will accumulate all deposits until they are allocated to profit, owner's pay, tax, OpEx and other accounts. Therefore incoming funds "sit" in the income account for a couple of weeks before being moved (28 days).

Understanding this, the income account can be setup as a savings account (to accumulate interest) and all other accounts can be checking accounts.

Profit First Professional Austin, TX


If you have a more frequent rhythm than the 10/25 rule, consider making all accounts checking accounts, or a combination based on the number of withdrawals. If you are able to stay under the withdrawal limit threshold, you can make an account a savings account.

If you prefer more flexibility, it's okay to have all accounts setup as checking accounts.

The most important thing is that you're focusing on profitability while still avoiding account fees. Over time you may realize you can pivot an account from checking to savings, or vice versa. The beauty of Profit First is it affords you this clarity in your business.

Ready to become permanently profitable? Click here to book a FREE coaching session with me!

Craig is a Certified Profit First Professional in Austin, TX who is passionate about helping service based businesses become permanently profitable.

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