A simple guide to choosing the right place to stash your tax savings as a small business owner
If you’re running a small business, you already know that setting aside money for taxes is essential. But one question most business owners don’t ask soon enough is where that tax money should actually live.
Not all bank accounts are created equal — and the right setup can help you stay organized, avoid accidental spending, and even earn a little extra interest while you wait for tax day.
Here’s how to choose the best type of account to hold your tax savings, plus how to structure it as part of your business banking system.
Why You Need a Separate Tax Account
Your tax savings don’t belong in your general business account or your owner pay account. If they’re sitting there, they’ll get spent. That’s not bad budgeting — that’s just how human behavior works.
A dedicated Tax Account ensures:
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Your tax money doesn’t accidentally get used for expenses or payroll
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You can easily track what you’ve saved
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You’ll have peace of mind as quarterly payments approach
This is a key part of the bank account system taught inside The Small Business Planner, which helps owners feel in control of their money without needing a spreadsheet every day.
What Type of Account Should You Use?
The best place to store tax savings is a business high-yield savings account — ideally one that’s:
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Free to open and maintain
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Easily connected to your main business checking
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Allows quick transfers in and out
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Pays interest on your balance
You’re not trying to grow this money long-term — you’ll use it within the year — but every bit of interest helps. The real goal is clarity and separation.
Top Bank Options for Tax Savings
Here are a few online business banks that offer easy-to-use, high-yield savings options:
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Relay – Lets you create multiple free accounts (great for your full bank structure)
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Bluevine – Offers a high APY on balances with qualifying activity
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Mercury – Great for tech-savvy businesses; clean interface and automation
You can also check with your local credit union or business bank — just be sure the account is labeled and used exclusively for taxes.
How Much Should Be in There?
Aim to transfer 25–30% of your net income into your Tax Account as you get paid. If you earn $10,000 in a month and your expenses are $3,000, that’s $7,000 in net income — meaning you’d move about $1,750 to $2,100 into your Tax Account right away.
When it’s time to make quarterly payments, the money is already waiting.
Bonus Tip: Automate Your Transfers
Some banks let you automate transfers based on deposits. For example, you can set a rule that 25% of every incoming deposit goes to your Tax Account.
If your bank doesn’t offer this, set a recurring calendar reminder to transfer funds manually every Friday or twice a month. The consistency matters more than the amount.
Final Takeaway
Where you save your tax money matters just as much as the habit of saving it. A separate high-yield savings account helps protect that money, keeps your books clean, and gives you one less thing to worry about as tax deadlines approach.
The Small Business Planner shows you exactly how to set up your business bank structure — including your Tax Account — so you can plan, save, and pay yourself with confidence.
Explore The Small Business Planner now → https://smallbusinessplanner.com/products/planner