Hey there. I have the same issue. Hopefully by sharing what I do, that will help you make a plan.
I'm not great at budgets, so every month I withdraw money from the business based on the previous years sales. So last year we sold 1.7m so I keep 170,000 in the checking account. This is not super smart but conservative and I'm working on it, and I have very large purchases from time to time and employees. So say at the end of the month there is 220,000 in the account. I withdraw 50,000. That is all transferred to my personal vanguard account. From there, 40% goes to vmfxx for tax liability, 20% goes to me personally, 20% to my taxable retirement, and 20% goes to capital reserves. It all gets invested but for vmfxx tax liability (but it's at 5% so great).
My philosophy is to always get cash out of the business asap. I leave questionably too much as my baseline, but it prevents me from worrying.
I hope that helps. I feel your pain of having cash sitting there doing nothing but it's actually working for you by being there.
I'm not great at budgets, so every month I withdraw money from the business based on the previous years sales. So last year we sold 1.7m so I keep 170,000 in the checking account. This is not super smart but conservative and I'm working on it, and I have very large purchases from time to time and employees. So say at the end of the month there is 220,000 in the account. I withdraw 50,000. That is all transferred to my personal vanguard account. From there, 40% goes to vmfxx for tax liability, 20% goes to me personally, 20% to my taxable retirement, and 20% goes to capital reserves. It all gets invested but for vmfxx tax liability (but it's at 5% so great).
My philosophy is to always get cash out of the business asap. I leave questionably too much as my baseline, but it prevents me from worrying.
I hope that helps. I feel your pain of having cash sitting there doing nothing but it's actually working for you by being there.
Statistics: Posted by magnusw — Sun Jun 09, 2024 11:42 pm