How much of my bank account is actually mine?
The number on your bank statement isn’t the whole picture. That balance includes money you owe but haven’t paid yet. To know what’s actually yours, you need to subtract everything you’re committed to paying.
Start with your obligations. Add up unpaid vendor bills sitting in your inbox or accounts payable. Include any credit card balances you’ll need to pay off. Factor in payroll if payday is coming before your next deposit. Don’t forget payroll taxes. Even if you deposit them monthly or quarterly, that money isn’t yours to spend.
Sales tax works the same way. If you collected sales tax from customers, that money sits in your bank account but belongs to the state. It’s not available cash. Neither is any loan payment due before your next revenue hits.
For contractors, the calculation gets more complicated. Customer deposits for projects that haven’t started yet aren’t really your money. You haven’t earned it. If you cancel the job or the customer backs out, you might owe it back. Same with deposits on jobs in progress where the work isn’t finished. That cash represents an obligation to complete work, not profit you’ve made. Proper construction job costing helps you track which deposits are earned versus which are still obligations.
The simple calculation is bank balance minus accounts payable minus accrued payroll minus payroll taxes owed minus sales tax owed minus customer deposits for unfinished work. What’s left is closer to your true available cash.
If that number is smaller than you expected or even negative, you’re not alone. Many business owners discover they’ve been spending money that wasn’t actually theirs to spend. That’s how cash crunches happen. The bank shows $50,000 but you have $60,000 in obligations, and suddenly making payroll or paying a critical vendor becomes a scramble.
Knowing your real number changes how you make decisions. You stop saying yes to equipment purchases or owner draws based on bank balance alone. You start seeing the timing of payables and receivables as something to manage actively.
Working with a bookkeeper in American Fork who understands your business means having reports that show your true cash position, not just your bank balance. Tracking payables, receivables, and tax obligations gives you visibility into where you actually stand. Without that, you’re making financial decisions based on incomplete information.
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More Questions
How do I avoid common bookkeeping mistakes?
Keep personal and business finances separate, reconcile accounts weekly instead of monthly, categorize transactions consistently, and stay current instead of letting things pile up.
Read answerHow do I manage finances for a flooring business?
Managing a flooring business financially requires job costing to track profitability by project and flooring type. Material costs, labor productivity, and cash flow management around deposits are all essential to understand.
Read answerWhat tax deductions can small business owners take?
Most ordinary and necessary business expenses are deductible. This includes operating costs, vehicle expenses, equipment, professional services, insurance, and marketing. The key is tracking and documenting everything properly.
Read answerHow do I track costs for a fix and flip project?
Set up each property as its own project in your accounting software and code every expense to it. Break costs into acquisition, renovation, holding, and selling categories so you know your true profit when you close.
Read answerWhat bookkeeping does a cleaning company need?
Cleaning companies need bookkeeping that handles recurring revenue, tracks labor costs accurately, and organizes expenses by category. The specifics depend on size and structure, but getting labor classification right and managing cash flow are the priorities.
Read answerWhat sales tax do contractors need to collect in Utah?
Most Utah contractors don't collect sales tax from customers on construction work. Instead, contractors pay sales tax when purchasing materials because Utah considers them the end consumer of materials incorporated into real property.
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