I'd set up four: an operating account for money in and bills out, a tax account, a reserve account and an owner pay account. Separate accounts make it obvious what's safe to spend, without opening a spreadsheet.
The four accounts
- Operating checking. Membership deposits come in here, and bills, payroll and card payments go out.
- Tax savings. Money set aside for the taxes your CPA expects you to owe.
- Reserve savings. A cushion of a few months of expenses for a slow month or a surprise bill.
- Owner pay. You move your monthly pay here, then to your personal account.
The owner pay account is optional. Some owners transfer straight to personal. I like it because it makes owner pay one clear transfer on a set day.
Why it works
When everything sits in one account, a big balance feels like money you can spend, even when part of it belongs to the IRS or your reserve. Separate accounts take that guessing away. What's left in operating is what's available to run the practice.
A made-up example
Say $30,000 comes in during the month and bills are $22,000. On a set day, you move $2,000 to tax savings, $1,000 to the reserve and $4,000 to owner pay. That leaves $1,000 extra in operating as a buffer. Each account shows its own job at a glance. Here's how to find your owner pay number.
Keep transfers simple
- Pick one or two transfer days a month, like the 1st and the 15th.
- Use the same amounts each time unless your numbers change.
- Label each transfer in the memo: taxes, reserve or owner pay.
How it shows up in your books
Moving money between your own accounts isn't income or an expense. It's a transfer. Your bookkeeper records it that way and reconciles every account monthly, savings included. A transfer recorded as income is one of the most common errors I see in new practice books.
Keep it at one bank
I'd keep all four accounts at the same bank as your operating account. Transfers between accounts at one bank are usually instant and free, and you can see every balance on one screen. Name each account clearly, like Tax or Reserve, so the label tells you what the money is for. If your bank charges fees for extra accounts, ask about a business savings option or compare banks before you open them.
What I'd do this week
- Open tax and reserve savings accounts at your practice's bank, in the practice's name.
- Pick your transfer days and amounts.
- Set up the transfers to repeat automatically.
- Give your bookkeeper access to the new accounts.
Common questions
Should the tax account be in my name or the practice's?
Ask your CPA. It depends on your entity and who pays the tax. Many owners keep it in the practice's name and move the money when payments are due.
How big should the reserve be?
Two to three months of expenses is a common target. Build it a little each month, and check your cash runway to see where you stand.
Do more accounts mean more bookkeeping cost?
A few more accounts to reconcile, yes, but a few simple savings accounts add little work and a lot of clarity.
Want every account reconciled, savings included?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.