I have a small HVAC business in Houston. I'm about 2.5 years in and have been working on building up a reserve fund (emergency fund). I am at a point now where I'm considering something like a CD or high yield savings account. My bank (Bank of Texas) has some decent options. I also had a friend suggest buying t-bills from the US Treasury. Any small business owners have suggestions?
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What to do with business reserve funds
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Last: 22 days ago by gigemhilo
I just went through this. There is no perfect option. I ended up in 5% HYSA, but not sure how long it will stay that high.
However, I found the question of how much to keep in a reserve fund to be the really hard question.
I landed on keeping just one payroll in the reserve account, then keep all other funds in a personal taxable brokerage account. Reasoning is that I want revenue from each month to be enough to cover all expenses from that month (we are not seasonal), and if I do want to invest into the business, I can loan the money to the business.
But super curious what others think.
However, I found the question of how much to keep in a reserve fund to be the really hard question.
I landed on keeping just one payroll in the reserve account, then keep all other funds in a personal taxable brokerage account. Reasoning is that I want revenue from each month to be enough to cover all expenses from that month (we are not seasonal), and if I do want to invest into the business, I can loan the money to the business.
But super curious what others think.
A good rule for amount of cash to have in reserves is two months of expenses. In the case of an HVAC business I'd say enough for parts and operations but not systems given how expensive those are. Im assuming you buy your systems on credit, if not then you may need to consider cash reserves for those as well.
As to where to keep it if you keep your books in QB Online they have 5% interest on cash held in "envelopes" in their checking account count. It's completely liquid and you can move it in and out of your operating account via ACH so within a couple of days to get it back if needed. To this point they haven't lowered rates even after the Fed lowered the base rate. If you aren't in QB then make sure to consider liquidity when making a decision. CD are great til you need the cash.
As to where to keep it if you keep your books in QB Online they have 5% interest on cash held in "envelopes" in their checking account count. It's completely liquid and you can move it in and out of your operating account via ACH so within a couple of days to get it back if needed. To this point they haven't lowered rates even after the Fed lowered the base rate. If you aren't in QB then make sure to consider liquidity when making a decision. CD are great til you need the cash.
A fearful society is a compliant society. That's why Democrats and criminals prefer their victims to be unarmed. Gun Control is not about guns, it's about control.
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We sweep our excess cash into a Schwab money market
Definitely some in Bitcoin
River Financial offers a business account where you can earn interest in Bitcoin at a rate of 3.8% on your cash reserves.
Easy way to start building a corporate treasury of hard money that appreciates instead of soft money that melts.
Easy way to start building a corporate treasury of hard money that appreciates instead of soft money that melts.
HYSA as long as its 4%+ is the easy answer.
You just want it generating a decent percentage but also completely liquid.
You just want it generating a decent percentage but also completely liquid.
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I've read that nobody who has held bitcoin for at least 4 years has done worse than doubling their money? Is this true?
I use a HYSA for my business savings.
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