Sub-accounts give businesses a simple way to separate money for different purposes while maintaining it all under one main account. It’s a simpler solution than opening multiple business checking and savings accounts, which can tie up your funds in transfers and transfer limits. Learning how to use sub-accounts can help you earmark funds for taxes, payroll, operating expenses, or emergencies, and make your cash flows easier to understand. The benefits of business sub-accounts vary by company, but the basic idea is straightforward: assign money to specific goals.
This guide covers practical examples of business sub-accounts and how to use sub-accounts effectively.
What you need to know
- Bluevine Business Checking sub-accounts function just like your main account, with unique account numbers.
- You can add up to 5 sub-accounts with Bluevine’s Standard plan, up to 10 with Plus, and up to 20 with Premier.
- Easily set up automatic transfer rules to automate money movement between your main account and sub-accounts.
What sub-accounts are
Sub-accounts are accounts (with dedicated account numbers) that sit within your primary business checking account. You can use sub-accounts to organize your money by purpose without needing to transfer between separate business checking accounts. You can use them to set aside funds for taxes, payroll, operating expenses, emergency savings, or specific projects without opening multiple standalone bank accounts. Sub-accounts can make it easier to track cash flow, budget for upcoming expenses, and see how much money is available for different parts of your business.
1. Increase profit over time
Sub-accounts can help your business increase profit over time when used in conjunction with the popular profitability strategies. Traditionally, a business’s profits are equal to its income minus its expenses. With some methods, you subtract profit from your income first, and then allocate whatever’s left toward your expenses. From there, you make decisions for scaling your business based on the money left over after you’ve accounted for profit.
By having a dedicated sub-account for profit and other cash buckets that tie into accounting approaches like this, you can streamline your accounting and guarantee that you stick to the required allocations to achieve success and growth with this strategy.
Did you know?
Automatic transfer rules can help you set your finances on autopilot, especially for cash flow management strategies that involve moving a specific percentage of income from your main account to a “profit” sub-account.
2. Separate personal and professional transactions
Separating personal transactions from business transactions but still having access to all the money in one place is particularly useful if you are self-employed or work as a freelancer. If this is the case, you will have fewer business financial transactions, so an option is to open up one main account for business and have a sub-account for personal transactions. Using sub-accounts separates business transactions from personal transactions, making it easier when tax time rolls around.
3. Simplify travel expense management
Most companies provide employees with corporate cards so that they don’t have to cover business expenses using their personal finances. However, you can set up a sub-account for travel expenses for all hotels, transportation, and meals and use it to reimburse costs. Sub-accounts allow you to keep all travel expenses separate and keep close tabs on your travel budget.
4. Have teams independently manage their projects
If your company has independent teams, then most likely each team has an independent budget. Using sub-accounts could allow you to set funds aside for each team and it might make it easier for department heads to manage their budgets. You can save yourself time and energy by no longer having to give approval for each budget-related decision. The one caveat here is that this budgeting method might require quite a few sub-accounts, depending on the size of your organization.
The good news: Bluevine Business Checking lets you set permissions for additional users on your account, and you can also issue debit cards for specific sub-accounts to make sure team members only have access to what they need.
5. Separate passive income from active income
Since your company can earn money in various ways, it’s helpful to separate the different income flows. For example, a bucket for passive income would include the sale of digital goods, cash-back programs, and affiliate marketing. Meanwhile, a separate bucket might include cash from the sale of physical products or specific services. Sub-accounts keep this information at your fingertips which is great to have on hand as you plan and forecast.
6. Plan ahead for taxes
Every company pays taxes throughout the year, whether it’s sales tax, income tax, corporate tax, or any of the other vast and varied taxes businesses are responsible for paying. Creating a sub-account to set aside funds for taxes makes those tax bills a little less intimidating and helps keep your business finances organized and on track. It also helps ensure that you don’t get hit with any surprises come tax season.
Watch the video above to see how Michelle from BeMore Accounting & Consulting uses sub-accounts to her clients’ advantage. Plus, read her full case study here.
7. Save funds for future investments
Setting aside funds to invest in the continued growth of your business is an excellent example of how sub-accounts can help you transform and scale your company. Many times, it can be difficult to invest money back in your business without having a plan in place or saving with that goal in mind. A dedicated sub-account for growth-related investments can be a good way to ensure that you allocate these funds right away so as not to dip into them for everyday expenses.
8. Establish an emergency fund
No matter how well your business may be doing, there will always be unavoidable, and sometimes costly, bumps in the road. Using a sub-account, you can plan for the unforeseen. Set aside money regularly to provide yourself with a safety net to cover the challenges that will inevitably come your way. Having this money set aside will give you peace of mind and help you learn to operate and plan for your business while accounting for that allocation on a monthly or recurring basis. Plus, your emergency fund can still earn interest. In the end, building some kind of savings could be the difference between failure and success for your company.
Organization is simple in theory but not as easy to initiate and maintain. Sub-accounts for business checking are a great way for business owners to organize business expenses and manage money better, which in turn sets you up for success.
Setting up sub-accounts
You can add up to 5 sub-accounts with Bluevine’s Standard plan, up to 10 with Plus, and up to 50 with Premier. To open a new sub-account, simply open the Checking tab of your Bluevine dashboard (you can’t open a sub-account via our mobile app), click your list of accounts at the top-left of the tab, and click “add sub-account.”
See how Bluevine can simplify and elevate your financial management.
Frequently asked questions
The main benefit of business sub-accounts is that they let you separate money by purpose without opening multiple primary checking accounts. You can create dedicated balances for taxes, payroll, operating expenses, emergencies, or specific projects, making it easier to see what money is available for each purpose. Bluevine sub-accounts have dedicated account numbers, and the account administrator can issue debit cards by sub-account.
With Bluevine, businesses can use sub-accounts for any category to improve cash flow visibility. Common examples include taxes, payroll, marketing, inventory, travel, operating expenses, emergency reserves, locations, and individual departments or projects. The best structure depends on how your business budgets and tracks spending.
Some business checking accounts include sub-accounts or similar budgeting features, but the number and functionality vary significantly by provider and plan. Bluevine currently offers up to five sub-accounts with Standard, up to 10 with Plus, and up to 50 with Premier. Businesses can use them to organize budgets, teams, taxes, locations, and other spending categories within the same checking setup.
A small business should have as many bank accounts as it needs to manage cash clearly. One checking account plus an emergency fund may be enough for a simple business, while a growing company may benefit from using multiple sub-accounts to separate funds for taxes, payroll, reserves, and different departments. Sub-accounts can provide useful separation while keeping day-to-day banking consolidated on one platform.