High-yield savings accounts (HYSAs) are creating buzz in the business world, and for good reason! In this episode, Danielle Hayden, CPA and founder of Kickstart Accounting, Inc., dives into how high-yield savings accounts can help business owners make the most of their cash reserves. With action steps you can take today, Danielle lays out how to use HYSAs as a smart, low-risk tool for growing your money while still keeping it accessible. Have your money work for you as it sits in savings!
Key Takeaways:
- What is a High-Yield Savings Account (HYSA): Danielle explains how HYSAs differ from traditional accounts and why they’re a smart choice for short-term savings, earning you hundreds, or even thousands, of dollars in interest with minimal effort.
- Key Considerations When Choosing an HYSA:
- Transfer times: How long it takes to move funds back to your checking account.
- Transaction limits: Planning around monthly withdrawal caps to avoid penalties.
- FDIC insurance: Ensuring your money is protected.
- Common Pitfalls to Avoid:
- Why your account name matters for proper accounting and legal compliance.
- The difference between business and personal savings and how to ensure you're staying tax-compliant.
- Action Steps:
- Open a high-yield savings account for your business if you haven’t already.
- Ensure your account is in the correct name (business or personal) based on your savings purpose.
- Review your current cash savings strategy and evaluate your options to choose an HYSA that aligns with your financial goals.
Topics Discussed:
What is a High-Yield Savings Account (HYSA)? (00:00:23 – 00:01:10)
Benefits of HYSAs for Business Owners (00:01:10 – 00:02:03)
Choosing the Right HYSA (00:02:03 – 00:03:30)
The Financial Impact of HYSAs (00:03:30 – 00:04:24)
Proper Use and Compliance Tips (00:06:24 – 00:09:05)
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Episode Transcript
00;00;00;00 - 00;00;23;01
Danielle Hayden
Welcome back to Business by The Books, the podcast that teaches you how to use your financials to manage your business. My name is Danielle Hayden, CPA and founder of Kickstart Accounting, Inc., where we use bookkeeping as a vehicle to help business owners finally take control of their numbers. I've helped thousands of entrepreneurs make informed financial decisions for over a decade.
00;00;23;05 - 00;00;42;24
Danielle Hayden
Today, we're going to be talking about high yield savings accounts and the best practices for business owners around high yield savings accounts. Now we are getting all kinds of questions and issues arising for our clients, and we're here to help you today. So what exactly is a high yield savings account? This has gotten all kinds of buzz in 2024.
00;00;42;24 - 00;01;10;04
Danielle Hayden
For a high yield savings account is a bank account that is designed specifically to pay you a higher interest rate than traditional savings or checking accounts. Essentially, this is a way to make your money work for you while it's sitting in your savings account. Think of it as earning money for just sitting there. This is awesome for any business owner, especially as we start to increase our cash reserves.
00;01;10;06 - 00;01;31;04
Danielle Hayden
You've heard me talk on the show about having cash reserves in order to be able to pay our taxes at the end of the year, to be able to make future investments, and to have 1 to 3 months worth of operating expenses saved up. But as our money is sitting there, can we have our money be working for us?
00;01;31;09 - 00;02;03;20
Danielle Hayden
The best part about these savings accounts is that they are low risk, and they don't require any complex investing strategies. These accounts are still liquid. This means that you can transfer funds back into your checking account within just a few business days. When you are choosing which bank to partner with for the high yield savings account, you do want to inquire how long it will take to transfer those dollars from your savings account from your high yield savings account into your checking account.
00;02;03;22 - 00;02;30;16
Danielle Hayden
We did find that some savings accounts, some banks took four days or others took 1 to 2 days. So what are you going to need this money for? And how quickly will you need access to those funds? So why is it every single person and business owner clamoring at the opportunity to get 4 and 5% interest? You know, banks today, they're really relying on customer inertia.
00;02;30;19 - 00;02;59;06
Danielle Hayden
They know that there is so much hassle of switching accounts, even for better returns. You know, think about all of the automatic payments and transfers that are already registered to your current account. There is a benefit to taking the time to set up the savings account at a bank, and taking the time to reset up your transfers and any payments that you have going in and out of your current account.
00;02;59;07 - 00;03;30;08
Danielle Hayden
Because here's the hard truth of what you're missing out on: the difference in interest rates can be astounding. For example, if you invest $20,000 in a high yield savings account compared to leaving in a typical checking account, that means hundreds and even thousand dollars in extra earnings over the course of just a year. Right? So these high yield savings accounts, they're low risk liquid, meaning you have access to your funds and we are earning money.
00;03;30;11 - 00;03;55;19
Danielle Hayden
You guys, we're talking about leaving dollars on the table. As business owners, let's be smarter with our money. If we are saving for taxes throughout the year, which you should be, if we are saving for our rainy day fund, which you should be, let's have this money in a high yield savings account that is earning us dollars. Now, I do want to be clear:
00;03;55;22 - 00;04;24;20
Danielle Hayden
These high yield savings accounts, they are not a replacement for retirement planning or other investments. This is not meant to build long term wealth. This is a short term tool, not a strategy for decades down the road. We are not suggesting that business owners and individuals stop investing. While the interest rate is higher than a traditional account and higher than it's been in years,
00;04;24;22 - 00;04;47;04
Danielle Hayden
it's nowhere near the amount that you can start earning from smart investments. I am not a financial advisor. I'm not going to tell you which investments to invest in. I just want to be clear that the high interest savings account are not replacing traditional investments. Now, our high yield savings account is also not going to replace our operating account.
00;04;47;06 - 00;05;14;16
Danielle Hayden
We still need to have a traditional checking account that will receive all the payments in from our customers. And where are we making our day to day payments? The high yield savings accounts can be used for other things such as the tax savings, the rainy day fund, profit, investment. You've heard me talk about on the podcast, we save for various things throughout the year such as team bonuses, our tax payments, any investments, computers, equipment.
00;05;14;18 - 00;05;40;12
Danielle Hayden
So we have different accounts for those different investment strategies. And so we're making regular transfers week over week into these different savings accounts. However, all of the money is coming into our operating account, and then we're transferring that money into the savings account. The savings account can have a transaction limit, so there are a few things that I want you to look out for when you're considering the high yield savings account,
00;05;40;20 - 00;05;52;00
Danielle Hayden
and one of them is transaction limits. A lot of these accounts have a certain number of withdrawals or transfers that you can make per month. You'll just need to plan accordingly to avoid penalties.
00;05;52;04 - 00;06;18;19
Aubrey Philipp
A quick break before we dive back in. If you're an entrepreneur ready to streamline your financials, Kickstart Accounting has the solution. Our proven bookkeeping services are designed for entrepreneurs like you to provide clear, accurate financial records, giving you time to focus on growing your business. Book a discovery call at Kickstart Accounting Inc dot com, or click the link in the show notes.
00;06;18;22 - 00;06;24;22
Aubrey Philipp
Let's get your finances in order so you can scale with confidence. Now back to the show.
00;06;24;24 - 00;06;46;14
Danielle Hayden
A few other things that I want you to watch out for as you're deciding who to partner with for your high yield savings. Are they insured? You know, we need to ensure that they account is FDIC insured, which protects your money up to the standard limit, which currently sits at $250,000. So if you have more cash than that, you might want to consider two different banks in two different accounts.
00;06;46;18 - 00;07;13;01
Danielle Hayden
Most of these banks who are offering high yield savings accounts, they don't have brick and mortar access. So they are online only. And for me, this isn't a deal breaker. I do operate an online business, but many of our listeners and clients are also doing a portion of their business online. So you just need to make sure that you are comfortable with managing that account digitally and not having access to be able to go to the bank.
00;07;13;03 - 00;07;44;09
Danielle Hayden
I actually get very frustrated when Chase requires me to go into the bank for something. So this is right up my alley and good news for me. Lastly, we need to watch for the account name. If the funds belong to your business, the account name needs to remain in your business name. If you are taking an owner's draw and investing this money personally, then we need to remove the funds from your business and invest the money.
00;07;44;12 - 00;08;08;17
Danielle Hayden
Personally, I want to be really, really clear on this. If the money is for your business, meaning your tax savings, your three months worth of operating expenses, any profit, investments, anything that you're going to use for your business in the future. If the money is staying in the business, then the bank account name needs to be in your business's name.
00;08;08;19 - 00;08;37;01
Danielle Hayden
If you are taking the money as a draw and then investing it personally, the account can be in your personal name. This is really, really important to ensure proper accounting and legal compliance. This is where we're getting the most questions and issues from our clients. Historically, at the beginning of 2025, there wasn't as many banks offering business accounts that were high yield.
00;08;37;03 - 00;09;05;06
Danielle Hayden
This has changed at the time of this recording. There are plenty of banks offering high yield savings accounts for businesses. So if you are not intentionally taking this money as a draw and saving it personally, I want you to find a bank who is offering this high yield savings account for businesses. Open the account in your business name and keep the funds in the business so that you're not taking a draw.
00;09;05;09 - 00;09;38;12
Danielle Hayden
You guys, for my ask of clients, listen up. This is huge. If you have not paid yourself a reasonable compensation yet this year through payroll, you cannot take owner's draws. The IRS says that you have to pay yourself a reasonable compensation before taking draws from the business. If you have opened a savings account in your personal name, then this is technically an owner's draw and an investment personally meaning the asset is not going to show up on the balance sheet, the assets not going to show up in your business.
00;09;38;15 - 00;10;01;29
Danielle Hayden
The asset will not be increasing the value of your business. This will be a draw. Those dollars are decreasing the value of your business. So go and take action. If you are not intending for this to be a draw, you'll get that business account now and transfer those dollars into your business savings account. All right, so to wrap up here, quick short and sweet episode,
00;10;02;02 - 00;10;28;16
Danielle Hayden
high yield savings accounts are simple. They are powerful. And they are another way of increasing the value to your business. They provide a safe, low risk way of growing your savings while keeping those dollars really accessible as you need them for day to day goals. Remember, use them wisely along your other strategies that align to your big personal financial goals.
00;10;28;20 - 00;10;55;01
Danielle Hayden
As every financial strategy, we need to take the time to do our research and find the right partner. Ensure that your high yield savings account is FDIC insured, it is in the proper name, and you have found the right partner that will give you enough transactions per month to allow you to save appropriately for your business. All right, you guys, if you do not have a high yield savings account, go open one right now.
00;10;55;01 - 00;11;22;10
Danielle Hayden
That is your action. Let's take action and grow our businesses together! I hope you enjoyed today's episode of
Business by the Books. Don't forget to hit like and subscribe! This is the number one way we can help other entrepreneurs find this podcast, because here at Kickstart Accounting Inc., it is our mission to help entrepreneurs understand their numbers, get access to this information, and grow and thrive in their business.
00;11;22;10 - 00;11;45;12
Danielle Hayden
So please help me, help other entrepreneurs understand their numbers so they can finally grow and thrive.