Below is a practical, comprehensive guide you can use to set up and manage business accounts for growth and financial stability. It’s organized into immediate actions, ongoing processes, control/tax/compliance steps, growth & financing strategies, KPIs and reporting, technology recommendations, and sample checklists/templates you can adapt.
Immediate foundation (first 30–90 days)
- Separate finances
- Open dedicated business bank accounts: operating checking, savings (reserve), and merchant/receiving account if needed. Consider a separate payroll account.
- Obtain a business credit card tied to the business EIN and restrict personal use.
- Register, document and authorize
- Ensure business entity, EIN/tax IDs, relevant licenses, and registered address are in order.
- Create an authorized signatories list and a simple delegation/approval matrix.
- Set up accounting system
- Choose and configure accounting software (see recommendations below).
- Establish a Chart of Accounts (COA) tailored to your business (sample below).
- Set accounting policies (revenue recognition, capitalization thresholds, expense categories, payment terms).
- Cash runway and reserves
- Calculate current monthly burn and cash runway; aim for 3–6 months of operating expenses in reserves for most small/medium businesses.
- Get help where needed
- Engage a bookkeeper and/or CPA for setup, tax planning, and initial reconciliations. Consider a fractional or virtual CFO for planning and fundraising.
Core accounting & cash management practices (ongoing)
- Bank reconciliation
- Reconcile all bank and credit card accounts monthly (or more frequently for high volume).
- Accounts receivable
- Standardize invoicing (terms, late fees), offer online payment methods, enforce credit checks for larger customers, use aging reports, apply collections cadence (30/60/90 days).
- Accounts payable
- Centralize vendor invoices, use approval workflow, negotiate payment terms (DPO), take discounts for early payment when appropriate.
- Cash flow management
- Maintain rolling 13-week cash forecast; update weekly. Use scenario planning (best/worst/most-likely).
- Payroll
- Use a payroll provider to calculate withholdings, run payroll tax filings, and remit tax payments on time.
- Fixed assets & capitalization
- Track assets in a register; apply depreciation/amortization per policy.
- Month-end close checklist
- Post all invoices and bills, reconcile bank/credit cards, review accruals/prepaids, reconcile AR/AP subledgers to GL, produce profit & loss (P&L), balance sheet and cash flow statements.
- Internal controls
- Segregate duties (bill entry vs approval vs payment), require dual sign-off for large disbursements, limit access to accounting systems, retain audit trails.
Chart of Accounts (high-level sample)
- Assets
- 1000 Cash — Operating
- 1010 Cash — Payroll
- 1020 Cash — Savings / Reserve
- 1100 Accounts Receivable
- 1200 Prepaid Expenses
- 1300 Fixed Assets
- 1400 Accumulated Depreciation
- Liabilities
- 2000 Accounts Payable
- 2100 Accrued Expenses
- 2200 Payroll Liabilities
- 2300 Deferred Revenue
- 2400 Long-term Debt
- Equity
- 3000 Owner/Shareholder Equity
- 3100 Retained Earnings
- Income
- 4000 Sales / Revenue
- 4100 Other Income
- Cost of Goods Sold (COGS)
- 5000 COGS — Materials
- 5100 COGS — Labor
- Expenses (group and subaccounts)
- 6000 Payroll Expense
- 6100 Rent/Occupancy
- 6200 Marketing & Advertising
- 6300 Professional Fees
- 6400 Travel & Meals
- 6500 Depreciation & Amortization
- 6600 Bank Fees & Interest
Financial reporting & KPIs (what to track and cadence)
- Daily/Weekly
- Cash balance, cash forecast (13-week), revenue run rate for recurring revenue.
- Monthly
- P&L, balance sheet, cash flow statement, AR aging, AP aging, bank reconciliations.
- KPIs:
- Gross margin %
- Net margin %
- Current ratio (current assets / current liabilities) target: >1.2–1.5
- Quick ratio
- Days Sales Outstanding (DSO) target depends on industry; generally <45 days
- Days Payable Outstanding (DPO)
- Burn rate & runway (for growth-stage firms)
- Customer acquisition cost (CAC), lifetime value (LTV) — for sales-driven businesses
- Recurring revenue metrics: MRR/ARR, churn rate, ARPA
- Quarterly
- Forecast vs actual, budget reforecast, budget-to-actual analysis.
- Annual
- Tax provision and return prep, audited or reviewed financials if needed, strategic budget & three-year plan.
Tax, compliance and regulatory
- Sales tax / VAT
- Register in jurisdictions where you have nexus; automate collection and filing where possible.
- Payroll taxes
- Ensure accurate withholdings, timely deposits, W-2s/1099s (or local equivalents).
- Estimated income taxes
- Set aside funds and pay quarterly where required.
- Employer obligations
- Worker classification (employee vs contractor), benefits filings, unemployment insurance.
- Record retention
- Keep tax returns and supporting documents for the statutory minimum (often 3–7 years; check local law).
- Annual filings and statutory accounts
- Budget for fees for tax preparers, audits, and statutory filings.
Internal controls, security and fraud prevention
- Controls
- Segregation of duties, approval limits, vendor master change controls, periodic surprise audits.
- Payments & banking
- Use ACH or controlled wire procedures; limit check stock and use positive pay where available.
- Access and cybersecurity
- Multi-factor authentication for accounting systems, least-privilege user roles, secure backups.
- Expense policy
- Written expense & reimbursement policies; require receipts, per diem limits.
Growth & financing strategies
- Optimize working capital
- Shorten receivable cycles (online payments, dynamic discounting), extend payables within terms, inventory optimization.
- Reserve and credit
- Maintain a revolving line of credit for volatility; hold 3–6 months operating reserves.
- Financing options
- Bank loans / SBA loans, lines of credit, invoice factoring or financing, merchant cash advance (use caution), equity financing (VC/angel), convertible notes.
- When to hire a CFO
- Consider a fractional CFO when growth outpaces founder capacity or when you need fundraising, M&A, or complex financial planning.
Systems & automation (software recommendations)
- Accounting/bookkeeping
- QuickBooks Online (small-medium), Xero (esp. service businesses), NetSuite (mid-market/scale), Sage Intacct (scalable finance), Wave (microbusiness free option).
- Payroll & HR
- Gusto (small businesses), ADP, Paychex.
- Payments & Billing
- Stripe, Square, Braintree, Chargebee (subscription billing), Zuora (enterprise subscription).
- Expense management
- Expensify, Ramp, Brex, Receipt Bank (Dext), Bill.com for AP automation.
- Integrations
- Use bank feeds, payment gateway integrations, and tools like Zapier or native connectors to eliminate manual entry.
- Reporting & BI
- Fathom, Spotlight, ChartMogul (SaaS metrics), Power BI / Looker for custom dashboards.
Policies, templates and checklists (practical)
- Invoice template essentials
- Invoice number, issue date, due date, payment terms, late fee policy, itemized description, payment links.
- Credit policy
- Credit application for large customers, credit limits, approval thresholds, collections process.
- Expense policy highlights
- Pre-approval limits, receipt requirements, reimbursement timelines, corporate card usage rules.
- Monthly close checklist
- Post all transactions, reconcile bank cc, reconcile subledgers, review accruals & prepaids, finalize P&L, distribute management reports within 5–10 business days.
- Quarterly checklist
- Update forecasts, review internal controls, check filings and licenses, tax estimated payments.
Common pitfalls and how to avoid them
- Mixing personal and business funds — prevents clear records; always separate.
- Poor cash forecasting — update weekly with scenarios.
- Weak controls — leads to fraud; implement segregation of duties early.
- Underinvesting in systems — manual processes don’t scale; automate before complexity explodes.
- Ignoring unit economics — know CAC vs LTV; bad unit economics kill growth.
Actionable 90-day plan (summary)
- Days 0–30: Open accounts, select accounting software, hire bookkeeper/CPA, implement COA, set up invoicing & payment rails, begin bank feeds.
- Days 31–60: Establish monthly close process, implement payroll provider, set up AR/AP workflows, implement basic internal controls, produce first management reports.
- Days 61–90: Build 13-week cash forecast, set KPIs and dashboard, formalize expense & credit policies, evaluate financing/reserve needs, schedule quarterly review & tax planning meeting.
When to get external help
- Hire or contract:
- Bookkeeper: day-to-day transactions and reconciliations.
- CPA: tax planning, year-end, compliance.
- Fractional/Virtual CFO: forecasting, KPIs, fundraising, strategic planning.
- Finance systems consultant: for ERP or scaling migrations.
If you want, I can:
- Draft a tailored Chart of Accounts for your industry (retail, SaaS, manufacturing, services).
- Create a 13-week rolling cash flow template for your historicals.
- Build a prioritized 90-day implementation plan specific to your company size and stage.
Tell me your business type, annual revenue range, and whether you use any accounting software now — I’ll prepare a customized plan and templates.
