Which Profit First accounts should be checking accounts and which ones should be savings accounts?

Hi, it's Kelley from Profit Scale Thrive. Coming today with a frequently asked question about Profit First.

And the question I get asked very frequently is whether my five fundamental accounts for profit first should be set up as checking accounts or savings accounts.

And first I want to explain the difference between the two.

Typically savings accounts are limited to six transactions in a month, but you will get paid interest checking accounts. On the other hand, are usually no interest will be paid on that money, but you have no transaction limits on your checking accounts.

So when I work with clients, knowing that those features, what I recommend is that your income account and your operating expense account, those get set up as checking accounts, because the idea being for income, hopefully, you're depositing money every day, which would end up being 20 to 30 transactions in a month, which would exceed your savings account limits.

And then on your operating expenses generally businesses have more than six expense payments each month. So those two accounts should be set up as checking accounts, but the feature with savings accounts being interest-earning it's recommended that for your profit account, your tax account, and your owner's comp accounts, those get set up as savings accounts because you'll earn interest and those accounts should have less than six transactions every month.

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