Multiple Bank Account Budgeting: A Guide for Business Owners

By Matas Pranckevicius

Content Manager, Relay

Staying on top of cash flow should be the biggest priority for most businesses. But it's easier said than done if you’re one of the 63%* of small businesses who are in the dark about their earnings. The good news is, you can buck this trend and get more clarity into your financials by learning to use multiple bank accounts for budgeting. And in this guide, we'll show you how to implement this type of budgeting system in your business. 😊

If you’re new to Relay, we’re a banking and money management platform that helps business owners stay on the money. Relay is built to *truly* serve small businesses, and you get 20 free checking accounts (the most out of any banking platform!) when you open an account. So, let’s take a look at how to put all of those accounts to good use. We’ll go over some common use cases in this article, but make sure to consult with your financial advisor to create the best setup for your business.

Banking Built for Business Owners

No account fees or minimums; 20 checking accounts; 2 savings accounts with 1.00%-3.00% APY; 50 virtual + physical debit cards. Open account 100% online.

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In this article:

How does budgeting with multiple accounts work?

At a basic level, multiple bank account budgeting works by opening dedicated expense and reserve checking accounts and allocating specific amounts of cash to each one. To use this budgeting method, you need a clear understanding of what types of expenses your business has and how to categorize them. 🔍

Budgeting with multiple bank accounts gives you more clarity into your cash position and your spending habits. It’s like budgeting with envelopes — allocating a set amount of cash for different types of expenses — only digital. For example, if you're concerned about saving enough for taxes and having enough to cover payroll, you might set up three separate accounts:

  • 🧑‍⚖️ Taxes

  • 👷 Payroll

  • 💸 Operating expenses (i.e., everything else)

Once you have these accounts set up, all it takes is a glance to know whether you have enough for each expense category.

Compare this to using a single checking account for everything. Say you have $10,000 in your account. The total sum on its own doesn't tell you the complete story. How much of that do you owe to contractors? How much is allocated to taxes? What about rent? When all your cash sits in one account, you have to rely on mental math 🤔 and keeping a mental list of accounts receivable and accounts payable to figure out your cash position.

A stop-gap for reporting

Tracking your budget with multiple checking accounts also acts as a reporting stop-gap when your financial reports are late. It's not uncommon for financial statements to be prepared once a quarter, late or not AT ALL. But as a business owner, you make financial decisions regularly. Can I afford this? Can I invest in this? So you need financial data to make good decisions.

But when you don’t have good data, expense and reserve accounts can act as a "stop-gap" and provide a wealth of information about your finances. If you put 15% of all income into a checking account nicknamed "Taxes — do not touch!", 🙅 you KNOW instinctively that this money does not belong to you, so you're less likely to misallocate funds. But how many of these reserve and expense accounts do you need to create?

How many bank accounts should your business have?

The number of bank accounts your business needs will depend on how you organize and categorize your income and expenses. You’ll want dedicated accounts for budget categories that are important to your business. 📝 For example, retailers may want a dedicated expense account for paying suppliers, while marketing agencies may want a payroll reserve account to keep tabs on labor expenses. In short: it depends.

While there’s no one-size-fits-all approach to banking with multiple accounts, there are some common things to consider. We dive into examples below, but remember to think through both revenues 📥 and expenses 📤 when setting up your accounts.

Do you run a YouTube channel with three streams of income and want to track each one? Consider setting up separate accounts for your advertiser payouts, affiliate payouts and merchandise sales. Having these accounts will give you greater visibility into each income stream. 

Your business type will also help inform your expense accounts. If you run an e-commerce store, maybe you want to have one dedicated account for inventory expenses and a separate account for software expenses. If you're running a short-term rental (Airbnb) business, maybe you want to have separate accounts for each property you manage, and an expense account just for paying contractors.

Want a live walkthrough of how this works in Relay? Join our bi-weekly webinar.

There are countless ways to set up your business — below we list some common checking account categories to give you some ideas and get you started.

💵 Primary checking account

Every business needs a primary checking account to receive and hold incoming payments. 💰 However, if you choose to organize your cash into dedicated expense and reserve accounts, you won’t be using this account to send money to anyone. Instead, you'll transfer money from this primary checking account into dedicated expense accounts. Wherever you bank, you’ll want to make sure this account covers all basic financial operations, like direct deposits and withdrawals.

Tip: if you bank with Relay, you can manage up to 20 free checking accounts for each business from a single dashboard.

🛠 Operating expenses

As the name implies, you’ll use the funds in your operating expense account to cover monthly expenses. Operating costs generally refer to the day-to-day expenses needed to keep your business running. This can include things like rent, software subscriptions, utility payments and travel expenses.

Banking Built for Business Owners

No account fees or minimums; 20 checking accounts; 2 savings accounts with 1.00%-3.00% APY; 50 virtual + physical debit cards. Open account 100% online.

Learn more

It might make sense to break down operating expenses depending on your situation. For example, if you run an e-commerce business you may want to open a dedicated account for software subscriptions and issue a dedicated debit card to go along with it.

Tip: you can issue up to 50 virtual or physical Mastercard® debit cards with Relay, and assign them to a specific checking account to simplify how you track expenses.

⚠️ Emergency fund

We all know what happens when businesses run out of cash — they have to cut staff, owners have to forego paying themselves, or they’re forced to liquidate assets. These are all absolute last-resort options and should be avoided. One way to create a buffer against this scenario is to save money in an account with a dedicated emergency fund for unexpected situations or expenses.

Set aside a small percentage of your monthly revenue and reserve it for your emergency fund. You can start small, but as long as you consistently set aside a portion of your income here, eventually, your emergency fund will grow. Having an emergency savings account can also help you avoid credit card debt, a potential hit to your credit score, or even a potential impact on your personal finances.

Tip: Relay lets you make percentage- or dollar-based transfers between your checking accounts, which makes setting aside money for an emergency fund much easier!

📁 Payroll

For growing businesses, making sure you can cover every payroll cycle can get complicated if you don’t have visibility into cash flow. And given that almost 50% of employees begin a new job search after two paycheck errors**, it's helpful to track your payroll funds in a dedicated checking account to make sure you never fall short. 

Dedicate one of your checking accounts to payroll and regularly fund it with the necessary amount to cover a month worth of payroll. This way, you’ll know at a glance if you have enough to cover employee pay, contractor pay and your own salary and can even fully automate your payroll!

Tip: If you bank with Relay and manage payroll with Gusto, you can integrate the two platforms and get shortfall alerts if you’re ever at risk of missing payroll. Learn more about how to choose a payroll service >

📈 Savings goals

Saving as a small business is one of the most important things you can do to get ahead. To make sure you’re on track to meet your financial goals — whether it’s a down payment on a new piece of equipment or a new car — you can set up separate savings accounts. In this account, you’ll store away the cash to meet your short-term or long-term goals.

For example, if your goal is to increase your savings by 5% this year, you’ll want to set up automatic transfers and allocate 5% of your revenue into this account every month. Just remember that this should be a different business savings account than your emergency fund!

✈️ Travel

If you travel frequently for your business, having a separate travel account can be very helpful. Not only will it allow you to set aside the right amount of cash, but it will also make it easy to see deductions when tax season comes around. You can also issue dedicated debit cards and assign them to your travel account — which makes it easy to track what you're spending when you travel.

Tip: Relay has direct integrations with QuickBooks Online and Xero, which helps you speed up your bookkeeping and makes accounting for your travel expenses a breeze!

💲 Taxes

Taxes can catch you by surprise if you’re not careful. It’s one of the most common mistakes that business owners make — failing to save up enough to pay the IRS. Having a dedicated account just to store your taxes will help you avoid this. If you do nothing else, setting up a second checking account just for tax withholdings — separate from your spending account — can give you a lot of financial clarity.

For example, if your business brings in $10,000 a month and you pay 15% in taxes, you’ll want to store away $1,500 a month in your tax account. Then when tax season comes around, you know you have the necessary cash reserves set aside.

Multiple bank accounts budgeting example

Understanding how each bank account works together to create a cohesive financial picture can be challenging. What amount of money do you allocate where? To simplify it, here’s an example of the multiple bank accounts budgeting method in action.

Banking Built for Business Owners

No account fees or minimums; 20 checking accounts; 2 savings accounts with 1.00%-3.00% APY; 50 virtual + physical debit cards. Open account 100% online.

Learn more

Let’s say you own a small service-based business, bringing in $10,000 of revenue each month. You’ve set up 7 business checking accounts to categorize your cash flow and gain clarity into your spending habits:

  • 💵Primary checking

  • 🛠Operating expenses

  • ⚠️Emergency funds

  • 📁Payroll

  • 📈Savings goals

  • ✈️Travel expenses

  • 💲Taxes

Since you transfer all funds from your 💵 primary checking account to the dedicated expense and reserve accounts (OPEX, Payroll, Taxes, etc.) at the end of the month, you can see how much you have to cover expenses at a glance.

Using the above example, here’s what your cash flow allocations could look like at the start of each month. 👇

Checking account

Example transfer rules

Example amount at month start

💵 Primary checking

Receivables. At the start of the month, we allocate funds from this account to the others.

$0 — because we just allocated the funds to other accounts

🛠 Operating expenses

Funds to cover operating costs


⚠️ Emergency fund

2% to build an emergency fund


📁 Payroll

Funds to cover 1 month worth of payroll


📈 Savings goals

2% for savings goals


✈️ Travel expenses

Est. travel expense budget


💲 Taxes

Est. 15% for taxes


Scenario: Now, suppose it's almost the end of the month and you take a look at your primary account (where you receive income) and see that there's only $2,000 in it. This should immediately tip you off that something has gone wrong. Maybe you're still waiting on a payment from a client, or maybe sales took a hit this month. Either way, when you have multiple accounts for budgeting, you can see and catch this ahead of time and find a strategy to overcome it.

The benefits of using multiple bank accounts in Relay

Simply put, using multiple bank accounts to categorize your cash flow in Relay gives you greater visibility into how you spend your money. And once you have this financial visibility, you can make better strategic decisions about where to allocate resources. Here are the main benefits of using multiple business bank accounts in Relay:

  • Greater visibility into your current cash position. Using digital banking as opposed to a traditional bank gives you more visibility into your cash flow and what you’re earning, spending and saving.

  • Easier to stay within your budget. Categorizing your expenses makes it easy to see if you’re within your business budget. With multiple bank account budgeting, you can isolate categories and prevent cash flow issues in one area from affecting another. 

  • Easier to save for taxes. Small business taxes can get complicated, but you can make things a little easier on yourself by saving for the tax season in a separate account. When it’s time to pay the IRS, you know you won’t be caught off guard. 

  • Faster bookkeeping. A big advantage of using multiple accounts in Relay is that it can speed up your bookkeeping since you already know which expense categories are associated with which account. Plus, Relay’s direct integrations with your favorite accounting software speed things up further yet.

  • More secure. First, Relay business accounts are FDIC-insured via Thread Bank. But in addition to that, using just one checking account for receivables and allocating your funds to dedicated expense accounts keeps your information private. Better yet, online banking gives you more ways to keep your business secure while banking conveniently.

➡️ Bank with Relay

Hopefully, by now you have a better understanding of how Relay can help you increase financial visibility and help you stay on top of your cash flow. If you don’t yet bank with Relay but want a solution for multiple accounts budgeting, apply for a free account here.

Banking Built for Business Owners

No account fees or minimums; 20 checking accounts; 2 savings accounts with 1.00%-3.00% APY; 50 virtual + physical debit cards. Open account 100% online.

Learn more

Relay has no account fees or minimum balance requirements, provides FDIC-insured accounts through Thread Bank, and lets you open up to 20 free checking accounts for each business — the most out of any banking platform! This also means you won’t have to rely on a different bank or pay monthly fees for each account.

* Source: Intuit — Small business payments and cash flow in 2021

** Source: Fit Small Business — 13 Payroll Statistics You Need to Know in 2022