Does Your House Cleaning Company Need Business Bank Account? And do you need a personal account for the money you will earn? Learn how a personal banker can help you grow your business.
Listen: Business Bank Account
Watch: Business Bank Account
Hey there, I’m Angela Brown, and this is Ask a House Cleaner. This is a show where you get to ask a house cleaning question, and I get to help you find an answer. You can find this and 400 other answered questions in this series on our YouTube channel.
Cleaning Business Bank Account
Does your cleaning business have a business bank account, and do you need one? There’s a house cleaner that called in and he asked this question.
“I was wondering if you have any tips on starting and running a business license and business bank account. I’m happy that I bought your book and I’m ready to start my house cleaning company. Thanks a lot.”
All right, I’m super excited that you asked the question. And my answer is, as far as the business licenses go, check with the state that you live in.
Every State Has Its Own Rules
Every jurisdiction has its own rules for a business license, depending on, do you need one or don’t you, is it dependent on whether you have a storefront where people come to your store.
Or if you’re out cleaning in people’s homes and you’re working from the trunk of your car, you may not need a business license. Now I would check with the state that you live in and the jurisdiction, to make sure that you’re on target with that.
It’s Better to Set Up a Business Bank Account in Person
All right, as far as the business bank account, I love this question. So my suggestion is, I know you can set up a business bank account online. I recommend you don’t do that.
I recommend that you get in the car and you drive down to a local branch near where you live, where there’s a real person that can give you business advice. There are personal bankers that are designed for small business owners and they will help you.
I Set My Business Bank Account Up When I Started
So I did this exact same thing. When I spun off my business in 2016, I went down to the local branch and I walked in and I sat down, there was a person that was there to greet me. They were friendly. I said, here’s what I’m trying to do. And I spelled out my business to them. When I did that, an amazing thing happened. She said, “Okay, how much are you going to pay yourself?”
And we agreed on my salary that I was going to make every week. She said, “I would like to help you set up a business bank account. And I would like to help you set up a personal account where this money, this amount, this figure that you gave me to get sucked over automatically into this account every single time money comes into the account. That way you got paid first, and it’s not mixed with all the money that you’re going to pay for all of your other business expenses and your payroll.”
And I said, “Whoa, that’s a pretty great idea. I get paid first.”
Make Sure You Get Paid as the Business Owner
Now as a small business owner, we’re usually the last people to get paid, okay? So I love the fact that it was going to happen automatically without my knowledge.
Now she says, “I’d like to set you up to another account. This is going to be like a savings account. And we’re just going to suck out 30% of all of the money that comes into your account for taxes so that when you get ready to pay your quarterly and your annual taxes, the money’s already waiting in the account for you.”
And you don’t have to make the decision about, am I going to rob Peter to pay Paul as the saying goes. I said, “Wow, that’s actually a pretty great idea.” So all the money that comes in magically goes into a savings account for taxes.
You Have to Set Aside Money for Marketing Too
Then she said, “What about your marketing?” And I said, “What about my marketing?” She said, “Here’s your problem a lot of small business owners get into, they are so focused on making payroll, paying for cleaning supplies, paying for all of the different stuff that happens in their business that is emergency things, that they forget to set aside money for the marketing.
Would you like to have a marketing account that we just take money off the top of whatever’s left?” And that goes back into building the business. That goes back into the marketing and the advertising and the SEO and all this stuff because it’s a big chunk of business.
A Lot of Small Businesses Don’t Save Enough
She said that part is where a lot of the small businesses fall apart because they don’t save and they don’t budget for it. And when push comes to shove and money’s tight, the money’s not there to help grow the business. You need to always be growing.
And I said, “Well, won’t there be any money left if I keep sucking all the money out and putting it in all these other accounts?” She said, “Actually, it’s just a business strategy, so that when you have the money that comes in, the money that’s left is the money that you’re working with” so it’s going to force you to go get new clients and it’s going to force you, instead of thinking, oh, I have all this extra money that then has to be dished out elsewhere, it’s already dished out elsewhere.
And the money that you see is either going to make it or break it for you. It’s going to force you to go get new clients to get enough money to pay all the rest of the bills. And I said, “Huh, isn’t that interesting? Let’s do that.”
Set Up a Business Marketing Account
So we set up a marketing account where the money comes in. A certain number of that money, a certain percentage gets sucked into the marketing account, and that is the money with which we pay our Facebook ads and all of the other marketing that we do for our business, okay?
So it was a brilliant idea, but it took a human sitting down understanding my business. Now, if I’d gone online, I probably would’ve gone online and opened an account and it would have been one account.
And I would have jumbled everything into that one account. And I would have tried to run my business from that.
Set Up Your Business On QuickBooks Online
Now the beautiful thing is this, Savvy Cleaner, which is a training company that I own for house cleaners and maids, we train everybody to set up their business on QuickBooks Online. I’m not affiliated with them. I don’t make any money from doing it.
It’s an online program that links to all your different bank accounts. So when you get ready to run your reports, you can run a very quick report and see exactly what vendors you paid for your marketing and what account it came out of.
And if money gets tight, that doesn’t affect your contractors or your payroll, because that’s a separate account, that’s a separate section of your business. It’s not drawn from that same bank account, right? So having separate accounts was a beautiful thing.
You Can Also Set Up Business Credit Cards
Also with QuickBooks Online, it allows you to set up business credit cards. So if you have a company credit card that you use to buy cleaning supplies or to buy marketing or whatever, and you pay that off at the end of every month, that still shows up with the credit card expenses and it tags into your system and shows exactly where it goes on your Schedule C for your taxes.
It makes accounting so easy. Lots of house cleaners get into the cleaning business because they want to earn money and they want to grow a business. And the money scares them because they don’t understand the full latitude of what it is.
But instead of thinking of, oh, no money, it’s this big thing I don’t understand, I want you to think of money as a part of your business that’s fun and easy to understand and easy to do.
Reframe the Way You Think About Your Money
If you reframe the way that you think about it, and you have a personal banker that can answer questions like that, and they can help set you up to get on the right track financially for your business, your business is going to be one of the few businesses that actually succeed.
Every week when you do your weekly accounting and you sit down and you do your payroll and you pay your bills and you make sure that everything matches up in QuickBooks, it’s going to take you 15, 20 minutes of your time. And you’re going to go, “Wow, look at my business.”
And you’re going to watch and be able to measure the growth of your business. You’ll be able to track it. You’ll be able to do your budget. Everything will fall into place, and it will be effortless because you understand all the nuances of how money works.
Don’t Do It All Alone
So if you’re just getting started, my suggestion is don’t do it yourself. Go down to the bank. There are lots of banks, there are lots of branches. Lots of them are national banks that are reputable banks.
They’ve got easy accounts. If you keep a certain amount in the bank, it doesn’t cost money to have a business bank account.
Off of that, you get a debit card, you can get a credit card, you can get lines of credit, even if it’s small, or even if it’s leveraged, you can start out by building your business credit and a personal banker out of bank can help you do that.
Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports – https://amzn.to/3k3o3MZ
Think and Grow Rich – https://amzn.to/3k2Y60e
Starting a Business All-in-One For Dummies – https://amzn.to/37sMpuB
Legal Forms for Starting & Running a Small Business: 65 Essential Agreements – https://amzn.to/3ueyBO3
Start Up: Insider Secrets on Building Your Business Credit – https://amzn.to/2ZshzxI
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