All Modules
Part 6 of 12FREE

Separate Your Money

Banking & Bookkeeping

The Separation That Protects Everything

In Module 1, you learned that your LLC only works if you maintain separation. In Module 2, you set up a tax system. In Module 3, you learned to read your P&L. This module is where all three converge: the financial operating system that makes your business a real business, not a side hustle with an EIN.

Scenario

Personal credit card for supplies. Client check into personal account. Business rent from personal savings. Three months in, everything is tangled.

What happens next?tap to reveal

The 30-Minute Setup

1
Open a dedicated business checking account
Bring your EIN letter and Articles of Organization. Every business dollar goes through this account. No exceptions.
2
Get a business debit card
tap to continue
3
Set up automatic tax transfer
4
Schedule a weekly owner draw

How to Pay Yourself: The Decision That Saves Thousands

This connects directly to Module 2's tax lesson. How you pay yourself determines how much you keep.

Owner's Draw (LLC/Sole Prop)
Take money as needed. Simple. But self-employment tax (15.3% from Module 2) applies to ALL net profit, whether you take it out or not. On $100K net: $15,300 in SE tax.
Salary + Distributions (S-Corp)
Pay yourself a 'reasonable salary' (SE tax applies to salary only). Take remaining profit as distributions (no SE tax). On $100K: $60K salary + $40K distributions = $9,180 SE tax instead of $15,300. That's $6,120/year saved.
When to Make the Switch
Below $60K net profit: stay as LLC. The S-Corp payroll costs ($1,500-$3,000/year for a payroll service) eat the savings. Above $80K net: the math almost always favors S-Corp. Between $60-80K: ask your CPA. The crossover point depends on your state taxes and deductions.

The Bookkeeping Habit That Prevents Disasters

You can read a P&L (Module 3). You know what the numbers mean. Now you need the weekly habit that keeps those numbers clean and current.

The 15-Minute Monday Review

1
Categorize new transactions5 min

Uncategorized transactions make your P&L unreliable. Every transaction needs a home: revenue, COGS, labor, operating expense.

2
Check outstanding invoices3 min

From Module 3's cash flow lesson: profit on paper means nothing if clients haven't paid. Flag anything over 30 days.

3
Review cash balance vs. upcoming expenses3 min

The cash flow simulator showed how profit becomes negative cash. Check: can you cover next 2 weeks of expenses with what's in the account?

4
Compare to last week2 min

Revenue up or down? Any expense line jump? Catching a $500 anomaly on Monday is worth $5,000 of damage control on Friday.

5
Update your forecast2 min

Move the 13-week window forward. Add any new expected income or expenses you learned about this week.

The Compound Effect
Owners who do this weekly review catch problems 6-8 weeks earlier than owners who check monthly. At your revenue, 6 weeks of uncaught margin erosion can mean $3,000-$8,000 in preventable losses. 15 minutes prevents that.

Building Business Credit

Your personal credit got you started. Business credit is what gets you to the next level. The timeline is 12-24 months, so start now.

1
Establish the foundation
EIN + business bank account + business address. Your business is now a separate entity in the credit system.
2
Get a business credit card
tap to continue
3
Pay vendors on terms
4
Monitor separately

The 13-Week Cash Flow Forecast

Bookkeeping tells you what happened. Forecasting tells you what's about to happen. This is the early warning system that prevents the 'profitable but broke' death spiral you saw in Module 3's cash flow simulator.

Sample 4-Week View
Week 1
Week 2
Week 3
Week 4
Starting Cash
$8,200
$6,950
$9,150
$7,400
Expected Income
$4,200
$6,800
$3,500
$5,100
Expected Expenses
-$5,450
-$4,600
-$5,250
-$4,800
Net Cash
-$1,250
+$2,200
-$1,750
+$300
Ending Cash
$6,950
$9,150
$7,400
$7,700

This owner can see two red weeks coming. Week 1 and Week 3 have negative cash flow. Without this forecast, they'd find out when the account hits zero. With it, they can collect receivables, delay a non-critical expense, or push revenue forward.

From The Practice

A live cash flow forecast turns surprises into decisions. When a cash crunch shows up 3-6 weeks out, you address it before you feel it. That Module 3 moment where profit turned into negative cash? A rolling forecast catches it weeks ahead, while you still have options.

Build Your Own Forecast

13-Week Cash Flow Forecast
$
Expected income (enter amount + which week it repeats):
$
$
$
Recurring expenses:
$
$
$
$
$

Customer Concentration: The Hidden Fragility

If your biggest client is more than 25% of your revenue, your business is one phone call away from crisis. Buyers in acquisition scenarios see concentration as the biggest discount on valuation. Build the habit of measuring this now.

Customer Concentration Score
$
Top 3 clients by revenue:
$
$
$

Knowledge Check

Why is mixing money legally dangerous beyond messy?

It's illegal
Courts can remove LLC protection
IRS shuts you down
Bank closes account
Takeaway

Your bank account is not your scoreboard. Separation, weekly review, and a 13-week cash forecast are the three habits that make everything else in this course work, permanently.

Pass the knowledge check above to complete this module.