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A. For most businesses it’s not necessary to have one account for payroll and taxes and a separate general operating account. In fact, it’s uncommon for small businesses to separate accounts for these purposes. Payments are generally made directly out of a single general operating account.
However, there are exceptions. Very large businesses or businesses with multiple locations often need to keep funds separate as an accounting function. Another example is if you use an employee leasing service or a payroll processing service that accesses your account to process payroll for your employees. In both cases setting up separate accounts may be a good idea for administrative and control reasons.
If you don’t fall under one of the exceptions, then you can use a single operating account. One caution—be sure you set aside money within the operating account to cover your tax liabilities.
Self-employed business owners sometimes get into trouble because they don’t set aside money for their employment and estimated tax payments. With funds available in their operating accounts, the business owners often use the money to pay for operating expenses. When it’s time to make a tax payment, the owners find that there isn’t enough money in the account to cover taxes. So when you set aside funds within your account to be used for future tax payments, don’t tap them to pay normal operating expenses.
To avoid running short on cash for taxes, consider making your tax deposits more frequently than required by the IRS—like immediately after writing every payroll. Although you may loose a little of the float on the money in your account, you won’t find yourself in the situation of not having the funds needed for your tax payments.
Q. I’m getting bombarded with e-mails about business opportunities and how I can make big money from my home. I have some serious reservations about whether these offers are true, but I get tempted to give them a try. Do any of these schemes really work or are they all scams?
A. The bottom line … if it sounds to good to be true, it probably is. The vast majority of these programs are smoke and mirrors at the best and illegal at the worst. Don’t become a victim to the scams.
Here are a few tips about how to keep yourself out of the clutches of unscrupulous pitchmen:
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If you go to a business opportunity seminar, don’t take your checkbook or credit card. You’ll be less likely to invest amid the meeting’s excitement and more likely to carefully weigh the pros and cons after you’ve left the seminar.
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Some television infomercials make it look like you’re watching a credible news program. You’re not. Even without all of the legal disclaimers plastered on the screen, it’s still a sales pitch.
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Never be pressured into spending money, giving your credit card number or signing anything without having time to check out an opportunity.
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Don’t fall victim to the ruse: “You have to decide immediately to get a special price.” If someone throws this line at you run—don’t walk—to the nearest exit. Hang up the phone. Delete the e-mail and block the sender.
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Get information about the company making the pitch. How long has it been in business? Where is the company headquartered? Call the Better Business Bureau and the attorney general offices in the city and state where the company is headquartered. Ask if there are records of complaints on file.
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Talk with at least 15 people who have been involved in the business for six months or more. Frequently, you’ll get two or three people whose job is to help sell the deal. If you can’t talk to at least 15 people, the opportunity can’t be doing too well.
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Last, but not least, trust your intuition.
There’s no free lunch, folks. Don’t be fooled. People selling these programs are good—good at getting your money!
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