What to do with winter money...

Discussion in 'General Industry Discussions' started by topsites, Jul 28, 2006.

  1. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I learned an important lesson over the years, which is to always save your winter money first thing starting in spring, no matter what.

    Yes of course this is actually the first year I listened to myself and didn't blow a bunch of money on equipment but put aside the cash for winter, which I had by end of May (or thereabouts).

    But soon I ran into some dilemmas:
    - I got a lot of money sitting in a business account doing absolutely nothing. The account earns no interest.
    - The IRS tends to monitor business accounts from time to time... Lets keep in mind that the IRS does not consist of anything but employees, people of most any age group and any financial status... What I mean is, to some younger and thus perhaps financially insecure employees at the IRS, several thousand dollars sitting idly in an account may appear to be a LOT of money!!! Guess what happens next? Yes, your tax status is reviewed and chances are you will owe something.

    So I found money market accounts... These pay around 4.5 - 5% APR, so every 3 thousand dollars in an mm account earns $11 / month interest while it sits waiting for winter, and is transferred away from the main business account... Really most any amount over that which is essential for business at the time should go sit in the mm account, I'm thinking 100 dollars extra cash in the wait frame of 6 months or so easy :) Yes of course this is income and is taxed, but hey, can't win them all.

    With online banking, there are some mm accounts that are electronic xfer only, I like these a lot myself.
  2. bigjeeping

    bigjeeping LawnSite Senior Member
    Posts: 903

    If my money is not invested it's sitting in my Capital One High Yield Savings account. Currently 5% apr. No min. balance. :weightlifter:
  3. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Yeah that's where mine is :laugh:

    I like it, anytime I need it, an electronic transfer and over it goes.
    Is it really 5%? I thought it was like 4.75... Oh well, probably the compounding.

    p.s.: I think we might be limited to a number of transactions / month by law... Not sure on that but it doesn't affect me as I would be making no more than one transaction (transfer) per month anyhow, if that much. After all, mm accounts are mainly geared as accounts where money sits until needed, or for short term savings (under 6-12 month frames of time, thou any time).

    PMLAWN LawnSite Gold Member
    Posts: 3,535

    Which IRS agent is that. I almost always have 100K in the account and that is nothing compared to big business.

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