The smartest place to store your tax funds so they’re safe, accessible, and not accidentally spent
If you’ve ever found yourself scrambling to pull together a large tax payment, you’re not alone. Most small business owners aren’t behind on taxes because they don’t make enough — they’re behind because the money was never set aside clearly in the first place.
The solution? A dedicated, strategic place to keep your tax savings.
Let’s walk through exactly where to store your tax funds, how to avoid common mistakes, and how to build peace of mind into your system — even if your revenue is inconsistent.
Why Your Tax Money Needs Its Own Account
When your tax savings live in the same account as your operating funds or owner pay, they’re too easy to spend by accident. You might invest in a new hire, stock up on supplies, or pay down a credit card — only to realize later that part of that money was actually owed to the IRS.
Separating your tax money is the fastest way to stay compliant and reduce stress.
Keeping it in a separate account makes the boundary clear. You’re not guessing what belongs to you versus what belongs to Uncle Sam — you’ve already decided.
Where to Keep Your Tax Savings
The best place for your tax savings is a separate business savings account at the same bank where your other business accounts live. Here’s what to look for:
1. Easy transfers
You want to be able to move money from your income or main operating account into this savings account quickly — ideally with the option to automate it on a weekly or monthly basis.
2. No fees or minimums
Look for an account with no monthly maintenance fee, no minimum balance, and no penalties for withdrawals (since you’ll be pulling funds out quarterly or annually for tax payments).
3. Label it clearly
If your bank allows, rename the account “TAX” or “Tax Savings” so there’s no confusion about what it’s for. This clarity helps you (and your bookkeeper) avoid mistakes.
4. Optional: Earn a little interest
Some business banks (like Bluevine or Relay) allow you to earn interest on idle balances. It won’t make you rich, but it’s a nice bonus for funds you’re holding anyway.
What NOT to Do
Don’t stash your tax savings in your personal account. That creates a messy paper trail and could lead to issues with your books or during an audit.
Don’t combine your tax savings with other reserve funds (like emergency or buffer savings). Each account should serve one purpose so you always know where your money stands.
And don’t wait until the end of the month or quarter to move tax money. Instead, treat it like a bill that’s due every time you get paid — and set aside 15–30% of revenue as it comes in.
How to Automate This Inside the Small Business Planner System
If you’re using The Small Business Planner’s Core 4 Account Setup, here’s how it fits in:
Income Account – All business revenue lands here
Business Expenses Account – You transfer what’s needed to run the business
Owner Pay Account – You transfer your consistent paycheck
Tax Account – You transfer ~35% of revenue to this dedicated savings account
Using this setup, your tax savings are handled automatically — and you stop guessing whether you’ll have enough when payment time comes around.
Inside The Small Business Planner, we walk you through how to set this up step by step, including:
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How much to save based on your structure (sole prop, LLC, S Corp)
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When to transfer and how to automate it
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How to forecast and adjust throughout the year
Final Takeaway
Where you keep your tax savings matters — not just for logistics, but for peace of mind.
A separate account turns tax season from a surprise into a non-event.
It’s not about being perfect with your numbers. It’s about building a system that protects your future, frees up your mental energy, and makes your business easier to run.
The Small Business Planner helps you put this system in place with confidence.
Explore the planner now → https://smallbusinessplanner.com/products/planner