Why Your Restaurant Needs Multiple Bank Accounts

Relay Financial for Restaurants

It’s the SOP (standard operating procedure) that every new business goes through. 

  • Create your business
  • Register it
  • Open up a business checking account


Maybe down the road your bank helps you out and you open up a payroll-specific account, or money market account for the business, but let’s be honest, this is not the norm. 

Most owners have one checking account for their business to pay for all their expenses. 

This complicates several areas of your business: 

  1. It makes the bank reconciliation process more complicated since a large variety of transactions all flow through one account making the reconciliation process harder than it needs to be. 
  2. You have to have a consistent structured bookkeeping process to ensure you code your transactions to the proper accounts so that you can later run a Year-to-Date P&L vs Budget Report. 
  3. You are reviewing your spend vs budget well after the period is over to see how you did. 


Part of the reason for only having the one checking account is that it is not easy, or quick, to open up extra accounts. 

It requires additional paperwork, trips to the bank, and weeks to accomplish, if you are lucky.  It’s a headache you don’t need.

However, with Relay Financial the process of creating a new account can be accomplished in a matter of minutes, and in fact you can have up to 20 separate checking accounts within your Relay account.

What Is Relay Financial?

Relay Financial is our online bank of choice – and we talked about it extensively back in June when Brex fired tens of thousands of small business owners from using their credit card. 

You can read more about that here. 

Relay Financial is great for many things (no overdraft fees!) and among them is the ability to create multiple bank accounts within minutes. 

Relay gives you the ability to create a digital envelope system for your restaurant, where you can easily open and name accounts, and transfer funds so that you can set up a payment budget system. 

You can also use this digital envelope system to create accounts to hold monies for: 

  • Operating Expenses
    • Payroll
    • Facilities (rent, utilities, repairs & maintenance)
    • Office Expenses
    • Advertising & Marketing
    • Inventory
    • Loans 
  • Income Taxes 
  • Future Capital Expenditures 
  • Working Capital Reserves 
  • And so much more 

The possibilities are endless. This is POWERFUL!

Relay Financial for Restaurants

Using a Digital Envelope System For Restaurants

With a digital envelope system, your budget vs actual analysis can be reviewed every day throughout the month. 

Paying an advertising bill? Use your Marketing account. 

Making a loan payment? Use your Loan account. 

Paying your employees? Use your Payroll account. 

And guess what, this process simplifies several areas of your business. 

  1. Your bank reconciliation process becomes much easier because now the nature of your expenditures are grouped into their specific checking accounts making the reconciliation process faster and easier. 
  2. It is easier to consistently and accurately code your business transactions to the correct accounts so that your year-to-date P&L vs budget report is more accurate. 
  3. As you pay your expenses, you can see how much of your budgeted funds you have left to spend, getting a LIVE budget vs actual analysis right in your bank account. 


If you are open to this new system of banking, but want to start of simple, we recommend that every business should be creating and utilizing multiple bank accounts for, at a minimum, the following: 

  • Checking (normal operating account) 
  • Payroll 
  • Sales/Excise Tax and/or Tips 
  • Income Tax 
  • Cash reserves


Some of the payroll and income tax authority names are identical, which can make it difficult to tell if a payment was income tax related, sales tax related, or payroll tax related. By segregating payroll into its own account, you won’t have to waste minutes/hours deciphering which. This account should work like a “swap” account. Meaning, that you move the necessary funds over as needed so that all checks/direct deposits and payroll tax payments are covered and there is a $0 balance after the payroll is run. This also helps identify if there were any errors in the payroll as a non $0 balance signifies that something went wrong. 

Sales/Excise Tax and/or Tips 

Just like employee tips, the money you collect from your customers for your state DOES NOT BELONG TO YOU! But because these funds are collected and go straight into your main checking account, you forget it is not your money and can get caught in the trap of spending it. When you fall into that trap you then have to use future sales to cover these liabilities and this is a BAD CYCLE to get into. Avoid this trap at all costs.  We suggest moving over all collected taxes and unpaid tips to a separate account once a week so you never run into an issue.

Income Tax 

If you read our series on the top mistakes that can cripple your business, you would have seen our point on not parking money aside for taxes. 

This is a must have account to create and should become part of your normal monthly business rhythms. When your month end is over and you have closed and analyzed your financials, you 

should move over the necessary funds to cover the YTD tax implications. In the past owners would not do this, or they would take the money out of the business checking and move it to a personal account, and then hope they remember to not spend the money frivolously. While this was always done in good faith, what ends up happening in most cases is that the business owner forgets that he is moving reserves into his personal account and ends up spending the money.

When tax time comes around, the owner again has to take funds from his business checking account to pay the tax liability.  This means you are using current year working capital to pay for prior year taxes. This is a terrible pattern that sadly most businesses fall into. Please stop! Park tax funds into a separate account. Your tax accountant will thank you, and you will thank yourself.

Cash Reserves 

If there are any business lessons to take away from Covid-19, it is that your checking account should have the necessary working capital to cover your business operations for at least 2-3 months. 

When you have cash balances in excess of this, move the funds into this reserve account. Use this as a barometer to raise funds for a future investment (like a new restaurant manager), or use this account for all shareholder distributions and only take out money when it is in excess of a base threshold. 

If you do not have money stowed away in a cash reserve account, then you should not be looking at any growth/investment expenditures, and definitely should not be looking at getting a line of credit to fund your growth. A line of credit is a great tool to help your cash flow during growth, but it should not be your source of funds for growth.

Need Help Setting Up Your Business Bank Accounts?

Here at U-Nique Accounting, we love helping restaurant owners run their business more smoothly. 

It’s what we’re here for. 

If you’d like to pick our brain about an issue you’re experiencing in your restaurant accounting, you can book a free call using this calendar and we’ll be happy to answer any questions you have. 

Until next time!

Matt C


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