Two weeks ago, I talked about the handful of things that kept my firm afloat as my life was (is?) literally falling apart.
Here are 4 more things that I didn’t even mention because they run so far in the background of my firm, I don’t think about them on a monthly basis. But they literally run my operational finances while I sleep (or cry or grieve or whatever).
1. Auto-draft all monthly fees: I’m charging upfront & fixed fee rates to 100% of my clients on the 1st of the month. They sign a contract in Anchor, agree to payment terms, and then every 1st of the month, Anchor pulls the money into my account and reconciles it to my QBO (not sponsored by Anchor - it’s just that good).
2. Auto-payroll: I’m an S-corp (because it makes sense for me, not because everyone should be an S-corp!), so I need to pay myself a salary of “reasonable compensation”. I pay myself an annual salary on a monthly basis via auto-payroll in Gusto. I almost never log into my firm’s Gusto account unless I’m changing a salary rate or 401k contribution rate. Money just lands in my family checking account every month. Same goes for my monthly owner’s distribution. Same amount every month that auto-transfers without me touching it.
3. Auto-credit card payments: I have one main business credit card that I use for all my firm purchases. That card is set up to auto-pay from my business checking account without my doing anything. But Erica, don’t you want to review the charges first? No, I review all the charges when I do my own month-end close procedures and reporting review for my firm (which I actually do faithfully every month), so I don’t need to do it again to pay my credit card bill.
4. Cash reserve: I always keep at least 3 months of business operating expenses + my salary + owner distributions as a cash reserve in my business. I keep 1 month’s worth of expenses in my checking account and 2 months’ worth in a high-yield savings account. I monitor this monthly and never worry about running out of cash.
Why is this all important?
First, because it makes your life easier, and isn’t that the whole point of this?
But also because there may come a time when you want to take a sabbatical (woo hoo!) or life hits you sideways (bad diagnosis, loss of a loved one, natural disaster) and you won’t have the mental capacity to pay attention to the details.
Having all of the above means: your business still gets paid, your family still gets paid, you don’t go into debt or rack up interest and late fees, and you give yourself cushion to figure out your next steps.
If your firm doesn't have the above set up, make it a priority to move in this direction in 2027.
Have questions about this (or anything)? I’d love to answer them. Feel free to hit reply.
Thanks for being here,
Erica
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