What Type of Bank Account Should Your Business Have?

One of the questions we hear all the time from new clients—and new business owners in general—is this: “What bank account should I open?”

Another one we get a lot: “Isn’t it a good idea to have accounts at multiple banks?”

The answer to both? It depends. (Classic accountant response, right?) But there are a few best practices that I recommend for small business owners, and I’ll explain why.

Here’s our take on how many accounts you should have and whether you really need to spread them across multiple banks.

The Profit First Approach

At Patrick Accounting, we’re a big believer in the Profit First system. We do it here at our firm and it has really helped me to understand even better where our money goes.  

If you aren’t familiar with the Profit First method, it’s a simple but powerful shift in how you manage cash flow. Instead of the typical “income minus expenses equals profit,” you take your profit first—before anything else. This helps you stay in control of your money and build a more sustainable, profitable business.

We’ve written extensively about Profit First, and if you’re curious about it, check out our Introduction to Profit First - and why it works!

But for now, let’s focus on the types of accounts you’ll need to make it work.

1. Income Account

Your Income Account is where every dollar of revenue goes before it’s allocated to any expenses, savings, or other needs.

Why? Because this system makes it easy to divide up your money with purpose. By keeping all deposits in one place, you can quickly move your funds into the right accounts based on your goals—whether that’s paying bills, setting aside taxes, or building your profits. This approach helps keep your business finances clean and organized.

2. Profit Account

Now, let’s talk about your Profit Account. This is the heart of the Profit First system—because you should be taking your profit first, not last.

The whole point is to make sure you’re not just working for scraps after everything else is paid. Even if you’re just starting out, set aside 1% of your income to this account. This will be your Current Allocation Percentage. As your business grows, you can adjust this percentage to match your profit goals. That’s the beauty of this approach—it puts you in the driver’s seat when it comes to your profitability.

Once you’ve determined your target profit, that’s what you’ll aim to move into this account. Over time, you’ll find that this shift in mindset makes it easier to build the profit you’re after.

3. Owner's Pay Account

Your Owner’s Pay Account is exactly what it sounds like: the account where your personal compensation gets paid out. It’s your business’s way of saying “Thanks for all the late nights and hard work.”

For me personally, I have my Owner’s Pay Account linked directly to my personal bank account, with a recurring transfer set up for my semi-monthly paycheck. Since I’m taxed as a partnership, this is technically a draw, but if you’re set up as an S-Corp or C-Corp, you might run this through payroll instead.

Either way, this account makes sure you’re paying yourself consistently, and not just waiting for the leftovers.

4. Tax Savings Account

Ah, taxes—the necessary evil. But you can make them a little less evil with a Tax Savings Account.

I’m a big fan of automating savings, so I recommend setting up recurring transfers to this account—whether weekly, bi-weekly, or monthly. This takes the guesswork out of whether you’ve saved enough for taxes and helps you avoid scrambling at the end of the year.

Following the Profit First model, your Tax Savings Account should be your Current Allocation Percentage for Tax. This auto transfer or drip should be checked for accuracy quarterly.

And here’s a tip: keep this account at a different bank. That way, you’re not tempted to dip into it for day-to-day expenses. Choose a bank with a solid mobile platform so you can easily transfer money when needed, but not so fast that it’s too tempting to pull from.

5. Operations Account

The Operations Account is where the bulk of your business expenses will come from. This is the account you’ll use to pay your bills and cover all operational costs except payroll. 

I recommend keeping this account at the same bank as your Income Account for easy transfers. Once your revenue hits the Income Account, you’ll allocate a percentage to your Operations Account for regular expenses.

Having this account separated from payroll helps you see exactly where your operating funds are going.

6. Payroll Account

I’m gonna bend the Profit First rules just a bit here because I believe in keeping a separate Payroll Account. Here’s why: payroll is often one of the biggest expenses for small businesses, and it’s also the most important one to get right.

You do not want to come up short on payday, so keeping payroll funds separate means you’re always covered.

Allocate your income to cover payroll regularly, and transfer funds from your Operations Account if needed to cover any shortfalls.

This setup also helps protect your Operations Account from the high volume of transactions that come with payroll. If your state allows you to require direct deposit, do it. (And if not, strongly encourage it!) It saves time, money, and a whole lot of reconciliation headaches.

Does This Sound Like a Lot?

I know it might seem like a lot of accounts to manage, but trust me—it’s easier than you think. Your Tax Savings Account is the only one you’ll need to keep at a different bank, and that’s just to keep it out of reach for impulse spending. The rest can be housed at the same bank, making transfers quick and painless.

Once you’ve got your percentages set, managing these accounts will take just a few minutes each time. With Profit First, it’s all about working smarter, not harder, and staying intentional with your money.

If your current setup isn’t giving you that sense of clarity and control, maybe it’s time for a change. Check out An Introduction to Profit First to see why it works, or take the next step with our Profit First Implementation Guide to start applying it.

If you're ready to make a real change, let's chat and get started!