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
What should I track as my company grows?
Start with cash flow, gross profit margin, and accounts receivable aging. As you add employees and take on more projects, layer in labor costs by job, overhead ratio, and customer profitability. The goal is seeing problems before they become emergencies.
Read answerHow do I improve my accounts receivable collection?
Improving collections starts with your system, not chasing invoices harder. Invoice immediately, set clear payment terms before work begins, make it easy to pay, and follow up systematically. For contractors, don't let work get ahead of payment.
Read answerWhat is job costing and why does it matter?
Job costing tracks expenses by individual project instead of lumping everything together. It matters because knowing your overall profit doesn't tell you which jobs made money and which ones lost it.
Read answerWhat QuickBooks reports should a contractor review?
The Profit & Loss by Job report matters most because it shows which projects made money and which lost it. Also review A/R Aging, A/P Aging, Estimate vs. Actuals, and Unbilled Costs by Job regularly.
Read answerWhat is the best way to track parts and inventory for plumbers?
Track parts by logging them against each job in your field service software or QuickBooks. Truck stock is the hard part since inventory moves across multiple vehicles. Regular counts and a simple checkout system for warehouse transfers keep your numbers accurate.
Read answerHow do I track material costs for drywall jobs?
Track drywall materials by coding every purchase to a specific job in your accounting software. Capture receipts in the field immediately and reconcile weekly to catch miscoded expenses before you forget which job they were for.
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