Running a successful shop requires more than just mechanical knowledge. It involves many moving parts, and just like a Ford transmission, everything can blow apart quickly without a firm grasp on the details.
You see, the tax man doesn’t play around, and payroll comes around every week, demanding a big chunk of your hard-earned money. Like it or not, as the owner, YOU are the only person responsible for your financial situation—no one else.
Let me be clear… You WILL get your ass kicked if you don’t learn key aspects of business ownership. And a crucial part of business ownership is setting up your banking account structure, especially in the beginning.
Now you might be thinking, “I have a guy for that,” or “I’ll just hire someone to run the books.” But think about this: how often have you heard of a business owner who lost everything because a “trusty” employee was stealing cash for years?
How about the guy who ended up in 100K debt because his accountant is a jack ass?
Maybe the guy who got hit with a huge tax bill he can’t pay? Now the IRS has their foot firmly on his neck, choking what’s left of his business to death.
Shop owners can’t just be good at fixing cars
Responsible owners of any business learn to delegate and surround themselves with people who fill a specific role in the business well. This is natural and a key component to success in business.
The problem is however, owners who are great mechanics but have zero knowledge of everything else surrounding their business are on a tight rope, it’s only a matter of time before it hits the fan like a blown timing belt.
This is an easy trap to get pulled into as a shop owner. We think just because we are paying people to do everything else, we can just fix cars and everything else is fine.
Believe me, I wish this was the case.
The reality
A major mistake any business owner can make is not having at least some knowledge of every aspect of their business. How can you keep an eye on your books if you have no clue what you are looking at? How can you ask the right questions and make the right choices if all you do is focus on fixing cars?
You can’t..
The result is an owner who can easily be manipulated, or is just straight up in the dark about their business. Foolishly thinking the numbers are great, customers are happy, and the sun is shining when it’s simply not.
Think of it like this, hiring a tech is easy for most shop owners. They know the trade well enough (hopefully) to spot a good mechanic from a bad mechanic.
They know the trade, a hack is a hack, “a dipshit’s a dipshit”, you ask the right questions and you know if the answers are bull. You can question, point out, and mold your new tech to perform work to your standards.
At the point of shop ownership you (hopefully) are at the point where your car knowledge is on point. This makes the service you provide easy to keep a handle on.
What about hiring your book keeper or accountant? Do you know enough about a chart of accounts? Can you look at a profit and loss report with some clue?
What can you write off?
How does sales tax get done?
What is a fixed asset list?
LLC or S-Corp?
Am I making ANY money?
See what I mean? You have to invest time in setting things up in a way you understand from the ground up, then and only then are you running your business.
The reality of owning a shop
Make no mistake… You can’t just fix cars and think you will make it. You need to encompass the finances or you will eventually crash and burn or come to a point where you need to rely on people to control your money.
This isn’t to say you shouldn’t have these people in place, it’s about being able to watch it all like a hawk from the tower.
My shop foreman calls me the “man in the tower.” He knows at a certain times I’m not turning wrenches because I’m upstairs in my “tower” handling the business. A quick side note here, if you run a shop your employees will pick up on whether or not you know what you are doing, whether its the finances, or turning wrenches.
You are responsible for their paychecks, health insurance, and everything in between. Turn a great wrench on the floor but bounce their checks on payday and you have lost serious stature as a boss and owner.
Would be wise to remember that one…
The start of financial success is at the bank, and in this post I’m going to break down setting up your bank accounts so you can have an instant view of your businesses health every time you log into your accounts.
Whether you are a seasoned shop owner looking to get organized for 2026, or you just signed the lease to your new shop, there is something to learn here.
Before we go any further I need to give credit where credit is due, the majority of this I learned by reading the book Profit First by Mike Michalowicz. This system I use is like a hybrid of what the book encompasses, I do it my way and it works for me.
I highly recommend reading this book if you own any business.
I’ll also say that this is how I run my banking, this should all be taken as advice. You ultimately need to decide whether this system will work for you and whether you will do what it takes to stay on top of it.
Why this works
The traditional way of running a shop is having one operating account and maybe a savings for equipment purchases and such. This works but it doesn’t allow you to get a good scope of the business unless you dive into your accounting software.
This system forces you to run the business off of percentages, hence allowing you to break down where you are financially just from checking the bank accounts in a pinch. This is by no means a replacement, but a quick snapshot of the businesses health.
How this works
This system works by opening 5 separate bank accounts as opposed to the traditional one and done approach.
Each account has a specific purpose and receives a set percentage of money added daily. This allows you to run your shop without worrying, “Will there be enough?” “Do I need to make changes?” or “Am I bleeding cash?”
Think of this as kind of an envelope system your grandma would use. You simply break things up into percentages and place the money where it needs to be. Over time you can tweak the amounts until you are running all of the day to day operations out of the operating account, paying your taxes out of the tax account etc…
One thing I will say is this does require daily work, you need to make sure the money is where it needs to be consistently. This is also why I love this way of banking, it forces me to be on top of my businesses finances like a hawk.
Sometimes you need to anticipate what’s coming and move money where and when it’s necessary.
You have been warned.
The 5 Accounts you need to open right now
Income account
This is the account ALL of the money the business brings in goes into. You will deposit all cash, checks, and credit card settlements here.
This has many benefits, the main benefit is you have a clear scope of money in, and money out. When you look at your bank statement there are only transactions showing money in, and then money transferred to the other accounts. No other noise to trudge through, this is a clear scope of influx to the business.
Profit account
This is the account that allows you to put a small percentage of money away that is for you as the owner of the business.
Too many owners wait until the end of the year hoping there is something left over for them, which in many cases there’s not much. This account is the beauty of the whole system, you are taking your profit BEFORE paying anything else. This changes the game as an owner and you finally feel like you are making money weekly.
Owner’s comp account
This account is like a savings account for you as an owner, in all honesty I use it like a savings account for the business at this point. Remember, all of this money can be moved between the accounts easily, you aren’t locking this money up in each account.
At the end of the year or at certain points you can draw this money, or keep it in the account for emergencies or a boost when needed.
Operating account
This is the big one, this account is what you run the day to day business out of. Here is where you can get a feel for how much percentage of the money coming in you can run the business off of. This account should eventually fall into a place where you can run the day to day business without needing to transfer money from the other accounts, (except the income account.)
Tax account
This is just as it sounds, the good ole’ account where you pay uncle Sam and his pesky side kick sales and use tax. This account keeps you from sheer panic when tax time comes. The money is already there and it’s based on on percentages. Say goodbye to the tax day cry fest.
Opening the accounts
Now that we know which accounts we need, it’s important to open them at a bank with a few key features. First and foremost, look for accounts without maintenance fees. We are dealing with 5 accounts, $10-$15 bucks a month adds up in fees.
I used Chase bank for my other business but they would not budge on a $15 dollar a month fee for EACH account.
I asked and still got a hard NO.
Peace out Chase, eventually I landed a bank with simple checking accounts that allow transfers between accounts without any fees.
This is what you need.
A word of caution, there are multiple online banks which offer no fee accounts, as a shop owner I wouldn’t go this route. You need to be able to walk into a branch, the last thing you need is a bank you can’t physically walk into if it hits the fan. Imagine being on hold all day with someone from God knows where to get access to your money.
I do recommend online banks for savings or emergency accounts, just not for day to day operations.
Once you find the bank the process is pretty straight forward, tell the banker what you are doing and make sure they allow unlimited transfers and don’t charge any additional hidden fees etc. Open the accounts with some seed cash and get your online access secured.
One note, make sure you link the accounts in your accounting software right off the bat. I’ll dive further into accounting software in another post, for now let’s keep going.
Make sure you are getting your money!
Once you have all of the accounts set up it’s time to start implementing the system. To start remember that ALL of the money flowing into the business lands in the INCOME account first.
For the most part sales in my shop are credit card transactions, however if there is cash or checks coming in you want to get them deposited as quickly as possible into your income account.
Every morning I compare my sales slips and confirm the credit card processer has deposited the correct amount into my income account. (Some withdraw fees daily, some at the end of the month.)
You want to make sure everything lines up between your invoicing software and what the income account shows as far as credit sales go, cash and check deposits are on you, just make sure you get what you are owed each and every morning.
You see the perk here? You are seeing the influx everyday, first thing in the morning, without anything else mixed in. It’s simple, 8,900 in sales for the day before? 8,900 deposited the next day. It’s just easier to visualize and look up if needed.
This is responsible ownership.
The moral of the story is that you are responsible for your money. Double-check your accounts to ensure you’re not being taken advantage of. If you are, deal with it immediately!
First thing every morning I check the accounts and start splitting up my percentages, here is the exact process.
Running the system in real time
Let’s say it’s Tuesday and the shop brought in 12,986.00 in closed sales the day before. This means the income account should show that (or the adjusted amount for fees) added depending on your situation.
I personally keep $100.00 dollars in the income account every day to avoid any issues with the bank. Keep in mind, depending on how your card processing fees are paid, you may need to keep more in there to cover the automatic draw the card processor takes out at the end of the month.
This is how I personally do this, modify this to fit your own situation.
Calculate what to put into each account
Here is where you will start to break things down … Here are the percentages I personally use in my shop, keep in mind you can adjust as needed, and I do, that’s the beauty of this system.
- Profit account 1%
- Owner’s comp account 12%
- Operating account 62%
- Tax account 25%
I will come in and open up my bank accounts online, per our example the shop brought in $12,986.00 the day before. It’s time to break things down.
First I subtract $100 bucks from the total in the income account, in our case that leaves us with $12,886 dollars.
Now we simply get out the old calculator and get punching keys…
- 12,886.00 x 1% = $128.86 (profit)
- 12,886.00 x 12% = $1,546.32 (owner’s comp)
- 12,886.00 x 62% = $7,989.32 (operating)
- 12,886.00 x 25% =$3,221.50 (tax)
Now lets add these numbers up to make sure our math is on point…
We are spot on at $12,886!
Make the transfers
Now that we know what amount to move to each account, simply open your online banking and transfer the funds to their corresponding accounts.
If you have QuickBooks or another accounting software, make sure to input the amounts there as well to keep everything on point for the accountants and book keepers.
At this point, the income account should have about $100.00 left, give or take a cent or two. Now it’s ready for another boost tomorrow morning.
Set it and forget it!
What’s the benefit?
So what’s the point here? Why are we doing this everyday in the first place? Why not just have one big account for all the cash?
One word = quick insights into the financial health of the shop.
Think about this… Tax time rolls around every year, where I live sales and use tax comes around every month, as well as a mound of other little gremlins looking to drag your accounts into the red.
When you have a Tax account set up and 25% of your gross sales gets put into it everyday guess what? When tax time rolls it’s ugly face in and Uncle Sam is looking to collect the money is there!
This system makes everything much less stressful, taxes are serious and the government can be worse than that girl you dated in high school.
Sales tax can creep up on you and sometimes hits at the worst time, this has personally saved me more than once. A few months back I spaced out and purchased some things for the shop while forgetting I had a 7,000 + sales tax bill due in a week.
Shit! No worries though, I had the money put aside and wrote the check without stressing because I had a plan in place.
I look at this account like I have already paid my taxes, the money is planned and allocated strictly to pay taxes of all kinds. This can mean sales, property, and income taxes.
At 25% of gross sales I’m in overkill, but remember this money can be moved freely between accounts. I have moved money between them all from one time to another, you just need to be aware of what you are doing and plan accordingly.
Using this system allows you to place money where it needs to be to run the business, and have some profit for yourself at the end of the year.
When it’s tuned in
As explained in the book Profit First, a business can become a cash eating monster worse than Aunt Betty. Especially when you cross a certain point of revenue per year. I use this system mainly to keep the shop finances tight but in reality it’s designed to make sure you get a piece of you own pie as well.
Trust me, that small percentage going into the profit account adds up. Start with a small percentage and gradually increase it as you get a feel for the business. When you want to take some cash, you won’t feel bad or wonder if it’s okay. The money will be there, allocated for your pockets.
The same applies to the owner’s comp account, but I mainly use mine as a savings account for the business. The theory is the same: pay yourself first and adjust the percentages until you can cover the entire day-to-day operations strictly off of the 62% of gross revenue or whatever your numbers are.
In all honesty my accounts are still settling in and evolving, that’s the beauty, you can tweak one percentage, or move cash where you need in a pinch. The main thing is you are able to take some profit first, pay your taxes without wanting to dunk your head in the parts cleaner, and figure out what percentage of your revenue actually pays the bills.
What am I looking at?
Remember how I said you can see the financial health of the business quickly?
Now that you know the general theory think about it, if you are putting 15% away for taxes but every time you need to pay taxes you are short, this shows you need to add additional percentage of gross sales to that account.
If you are taking 5% profit instead of 1%, you better reevaluate what you are taking and maybe lower that to add some extra to the tax account. Of course the goal is always to raise this percentage, just don’t do it until you know the business can sustain it.
The real cherry here is when you tune the operating account in. Here is where you are running the entire day-to-day operations of the business off of a predictable, set percentage. If 70% is working but suddenly in 6-months you are short every month, you know you need to start finding out why.
See the difference? Most owners try to find where they are bleeding cash when their accountant tells them they are screwed, many times when it’s way worse than it needs to be.
This system allows you to look and interact with your money everyday, it builds habits and strengthens you as an owner.
The book and system go much deeper than this article, but I’ve covered the important parts and shared what I personally do. I don’t follow the book perfectly, for what I need this has been a game changer for me.
Stay on top of your cash and get a real feel for your business, don’t be the owner looking in the couch cushions for money to pay Uncle Sam.
