Sub-accounts can be used for any number of aspects of business life: managing your finances, tracking income vs expenses, or just keeping track of the different parts of your business. The best part is that sub-accounts are easy to create and manage. You can even assign different levels of access to different users, making it easy to keep track of who is doing what with the company's money.
In this article, we'll explore the different ways you can leverage Bonsai Cash's sub-accounts with your business checking account. Let's get started.
Note: If you want one business checking account with the ability to instantly create sub-accounts, try Bonsai Cash. Our business checking account has no monthly maintenance fees, transaction fees, minimum balance requirement, and allows for unlimited electronic deposits. It's one account to organize your business banking simpler. Open an account today.
To put it simply, a sub-account is an account that resides within your main bank account. It’s like having a bunch of mini bank accounts all in one place, and it can be really helpful for organizing your money.
You can use sub-accounts to break down your expenses into more manageable categories, like rent, groceries, and utilities, without the extra hassle to manage multiple accounts. This can help you stay mindful of your spending and make it easier to save money.
Bonsai Cash is the best business checking account that allows you to easily manage, save, and spend your business funds. With Bonsai Cash, you can create envelopes – which are basically virtual sub-accounts – to divide your funds for various purposes.
It's a simple way to manage cash flow. You can set aside money for business emergencies, save some cash for future purchases, reserve some money for freelancer taxes, keep business finances separate among other things.
You can even devise a set of rules for your money as it arrives in your Bonsai Cash account thanks to Envelope Automation. For instance, you can allocate 40% of all the money you receive to the “Taxes” envelope and 20% to the “Rainy Day” envelope, depending on your preferences. This feature allows you to save more efficiently and stay focused on your short-term and long-term goals.
Bonsai Cash is a guaranteed online business bank that has everything you need to manage your business's finances.
Now that you understand the basics of a sub-account, let’s take a look at some ways to put them to use Bonsai Cash's envelopes for your business:
If you’re like most small business owners, your business and personal finances are closely intertwined. However, this can lead to some serious accounting headaches down the line. One way to avoid these problems is to set up sub-accounts specifically for your business.
This will help you keep track of your business spending and make it easier to file your taxes at the end of the year. It can also help you avoid any potential legal issues down the road.
If you own multiple businesses, you could avoid using the same bank account for two separate businesses.
Every so often, your business will experience a lull in sales. Rather than dip into your operating budget, you can use your sub-accounts to draw from your reserves. This will help you maintain a healthy cash flow and keep your business running smoothly.
For instance, let's say you're running a restaurant and you know that there's always a lull in sales between January and March. You can set up a sub-account specifically for your "reserves" and use it to cover your costs during those slow months.
One of the benefits of using sub-accounts is that you can earmark money specifically for tax payments. This ensures that you always have enough funds on hand to make your tax payments on time.
If you're a freelancer or independent contractor, then sub-accounts can help you take advantage of tax deductions. You can set up a sub-account specifically for business expenses and then write off those expenses come tax season.
No one knows when the next financial downturn will hit. But, if you're prepared, you can use sub-accounts to help you weather the storm. By setting up a sub-account specifically for your "rainy day fund," you'll make it easier to save up to the amount you need in case of an emergency.
When you have some money tucked away, you don’t have to worry about dipping into your regular savings or going into debt when something unexpected comes up.
Creating an accurate budget for your business is near impossible if you don’t know how much money is coming in and going out from each of your accounts.
Dividing your funds into different buckets according to their purpose (e.g. payroll, rent, marketing) can make budgeting a breeze.
When you have a clear separation of expenses between your personal and business account, it makes accounting and budgeting a lot simpler. This is because you can see exactly how much money you're making and spending every month.
By using sub-accounts, you can get this same level of clarity for your business finances. This will help you make more informed decisions about your business and keep track of your progress over time.
Another great use case for sub-accounts is when you want to create separate funding streams for different parts of your business. Maybe you have a side hustle that you want to keep completely separate from your main source of income, or maybe you want to set up a separate account for paying business debts or personal expenses.
Whatever the case may be, sub-accounts make it easy to do this without having to juggle multiple accounts.
If you’re trying to rein in your spending, then sub-accounts can be a great way to set budget limits for specific expenses. This will help you stay within your monthly budget and avoid overspending.
For example, if you want to limit how much you spend on food each month, you can set up a sub-account specifically for groceries. This will keep your spending in check and make it easier to stick to your budget.
If you have employees, then you know that payroll can be a real hassle. Thankfully, you can use sub-accounts to make the process a little bit easier. By setting up separate sub-accounts for each set of employees -- depending on their rank levels -- you can keep track of their wages and withholdings more easily. This will help you stay organized and avoid any compliance issues.
Also, if you offer your employees benefits, like health insurance or 401(k) contributions, you can use a sub-account to manage those contributions, which will make it easier to keep track of how much money you're spending on benefits and help you stay within your budget.
If you're self-employed, then you're responsible for paying your Medicare and Social Security taxes out-of-pocket. To help cover these costs, you can set up a sub-account specifically for your "insurance reserves."
This will ensure that you always have the money you need to pay your taxes on time. An added advantage? You'll also save yourself from paying any late fees or penalties.
If you own multiple businesses, it can be helpful to set up separate sub-accounts for each business. This will help you keep track of your expenses and income separately, making it easier to track your progress and identify potential problems.
For instance, using the example from before, if you own a restaurant and a catering business, you can set up separate sub-accounts for each business. This will make it easier to see how your businesses are doing individually and help you identify any areas where you might need to make adjustments. You'll also be able to keep track of your food costs, advertising expenses, and other overhead costs separately.
Here are a few reasons why you should prioritize using sub-accounts over applying for multiple small business business bank accounts:
The beauty of sub-accounts is that they are essentially add-ons to your existing account, without the hassle of having to apply for and open a new business bank accounts. This makes them perfect for small business owners who want to segregate their expenses into specific categories (e.g. payroll, rent, marketing), but don’t want the added inconvenience and expense of applying for a small business checking account.
With traditional bank accounts, you have to go through the hassle of applying for and opening a new business savings account. This can be a time-consuming process, especially if you have to gather all the required documentation (e.g. proof of address, proof of ID) for your business bank account.
Then, once you've opened the separate account, you have to transfer your money over and keep track of the two business bank accounts -- this can be an added inconvenience if you have a lot of tasks on your plate.
But with sub-accounts, you can easily split your funds into different categories without having to open and manage multiple small business checking accounts or paying a monthly fee. This makes them perfect for business owners who want to streamline their finances and keep things organized.
When you have a lot of balls in the air, the last thing you want is more complexity to deal with. A benefit of sub-accounts is that they are simple to set up and use. You can add them to your business account in minutes, without having to jump through hoops or fill out any extra paperwork.
This simplicity also extends to their functionality. With a sub-account, you can easily move money in and out, make transfers, and set up automated payments. In other words, sub-accounts allow you to manage your business finances with ease.
This is in contrast to having multiple business bank accounts, where you would have to go through the inconvenience of transferring money between business accounts every time you want to make a payment and dealing with a monthly maintenance fee.
This can be a real pain, especially if handling multiple tasks isn't your forte. With sub-accounts, you don't have to worry about this, as the money is all in one place and easy to access.
As a small business owner, you need to be flexible when it comes to your finances. The last thing you want is for something unexpected to come up and throw your business off balance.
Sub-accounts offer the perfect level of flexibility, as they can be customized to fit your specific needs. This means that you can set them up in a way that works best for you and your business. Whether you need to track expenses, earmark money for taxes, make cash deposits, or set budget limits, sub-accounts can do the job.
This flexibility is in stark contrast to traditional small business bank accounts, which are often inflexible and don't offer the same level of customization.
The best part is that you won’t incur any fees when using Bonsai Cash – this means no monthly transaction limits, monthly service fees, minimum balance requirements, or hidden fees.
It is one business account for all your small businesses' banking needs.
You can get started today.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?