PAYMENT PREPAREDNESS MATRIX Model (“PPM”)

I picked this tip up from Investment Bankers I know.  I follow this PPM model and, quite frankly, it has served me very well!  I pass this on to you as we are all small business owners who want to feel prepared within our financial resources.  

This Matrix requires some simple business commitments and discipline.  If it is followed, it is well worth it.

Here’s the idea:  Create four accounts.  Three checking accounts and a fourth account that can be any number or type of ‘savings accounts’ as you wish.  You’ll understand once you’ve reviewed the model.

The three checking accounts are vital:  1) your Sub Zero Business Operating account, 2) a Tax account, and 3) a Pay & Play account.

Your SZ account (Quad I) is for all business revenues and expenses.  The key here is to create automatic transfers into the Tax account (Quad II) and into the Pay & Play account (Quad III) of any estimated tax requirements and of any “reasonable salary” payments (or ‘Distributions’) you wish to transfer into those respective accounts (C-Corps, Partnerships, or S-Corps: consult your tax accountant).  Funds transferred into your Savings account(s) (Quad IV) come from Payroll or Distributions or from Pay & Play.  If you have any questions about setting up those transfer accounts, please contact me.

Follow the PPM Principles as outlined in the model.  Make it work for you.  You’ll soon have a good system for essential payment preparedness.

Call or write me with any comments or questions.