Sinking Funds

While Megan takes a little time away for a maternity leave, we are filling the blog with incredible guest contributors who share our mission of helping female boutique owners & Shopify sellers grow successful & profitable businesses. This article has been written by guest contributor, Michelle Kopp, and you can learn more about her and how to connect with her at the end!

Tax Time is Coming—Are You Ready?

 A Smarter Way for Small Business Owners to Manage Cash Flow Year-Round

Tax time comes around at the same time every year, yet somehow, it still sneaks up on so many business owners. Did you set up estimated tax payments and forget to pay them—again? And now, with just a month to go, you’re scrambling to figure out where that money is going to come from.

This isn’t just a tax problem. It’s a cash flow problem.

Think about those other business expenses that catch you off guard—quarterly sales tax, annual business insurance, inventory restocks, or even professional fees. On the personal side, big bills like property taxes or car insurance can also throw off your finances. Despite knowing they’re coming, they always seem to cause stress.

But here’s the good news: It’s not about memory or willpower. It’s about having the right system in place.

The Secret to Staying Ahead: Sinking Funds

Sinking funds are a simple but powerful financial strategy that helps you set aside money for future expenses before they become an emergency. Instead of scrambling to cover big payments, you’ll already have the money sitting in a designated fund, ready to go.

Why Small Business Owners Need Sinking Funds

As a small business owner, your cash flow can be unpredictable. Some months are booming, and others are slower. Sinking funds help you stay in control by smoothing out those ups and downs.

Here’s how they work:

✅ Protect Your Business Cash Flow – No more draining your checking account when tax time rolls around. Set aside money monthly so large expenses don’t disrupt your cash flow.

✅ Budget with Confidence – Know exactly where your money is going and plan for both business and personal expenses without stress.

✅ Avoid Debt & Last-Minute Scrambles – Instead of relying on credit cards or short-term loans, you’ll have savings ready for business investments, unexpected repairs, or tax payments.

How to Set Up Sinking Funds for Your Small Business

1️⃣ Identify Expenses – List all the non-recurring expenses in both your business and personal life, such as taxes, inventory refreshes, equipment purchases, insurance, or marketing campaigns.

2️⃣ Break It Down – Estimate the annual cost of each and divide by 12. This is the amount you should be setting aside each month.

3️⃣ Create Separate Accounts – Open dedicated savings accounts (like a high-yield Flourish account) or use a simple tracking system to allocate funds for each category.

4️⃣ Automate Your Savings – Make it easy by setting up automatic transfers so you’re consistently funding your sinking accounts without thinking about it.

Make Business & Personal Finances Simple

Many small business owners struggle with managing both personal and business finances—especially when cash flow is unpredictable. The simplest way to eliminate money stress is to create a streamlined system that accounts for both.

I help small business owners like you create an easy-to-follow financial framework that integrates both personal and business money management. If you’re tired of financial uncertainty and want a system that works for YOU, schedule a free consultation today.

👉 Let’s set up your sinking funds and create a cash flow plan that gives you confidence in your business and personal finances! Go to bit.ly/coachingwithverde.