It is important to understand the difference between an everyday account and a savings account. As a general rule, savings accounts yield interest, but are limited in the number of withdrawals during the statement period. An everyday account typically offers an many withdrawals and cheques, but does not yield interest.

Option 1: Since Profit First encourages the 10/25 rule (allocate funds and pay bills on the 10th and 25th) for most businesses, all accounts except for the Operating Expense (OpEx) account can be savings accounts. Note that a savings account can’t write cheques, so Owner’s Pay, Tax, Profit and other accounts won’t be able to issue cheques.

Option 2: Following the 10/25 rule, the Income account will accumulate all deposits until they are allocated to the Profit, Owner’s Pay, Tax, OpEx and other accounts on the 10th and 25th at which time those funds will be used for those specific account’s purpose. Therefore, incoming funds “sit” in the Income account for approximately 28 days a month.

Understanding this, the Income account can be setup as a savings account (to accumulate interest) and all the other accounts can be everyday accounts. This will allow the most flexibility for withdrawals and writing cheques, while accumulating the most interest.