How much to leave in business account

Is there something written about how much income can or should remain in a business owner's business checking account? I've gotten this question a couple times recently but in researching it I haven't found much information unless I'm not researching the correct question.

The two that have asked are just small sole proprietorship LLCs making $20,000 - 30,000 a year. After paying business expenses and estimated taxes, they'd have over $10,000 remaining in their business account and wondering if they had to distribute most of it to themselves or if they can leave it in the business account as long as the estimated taxes were paid on it.

Does the IRS or any other agency say what the requirements are?

Thanks for any help.

No requirements with the IRS or anyone else other than a bank and they have loan covenants to abide by. I always hear rumors that an owner should clear out all cash to minimize taxes. Of course, unless they are depleting cash to pay expenses, this has no effect on taxable income.

Not aware of any requirements unless mandated under state law (but this would typically be a bond, not a bank account) or by banks/loan covenants, either to avoid fees or for liquidity purposes.

I keep very little in my business accounts. If anyone asks me how much cash they need to keep available, it is always "well, what is your cash flow vs. expenses?"

I keep roughly enough to meet the bank's minimum balance requirements for avoiding monthly service charges, which in my case is $3,500. I forecast my cash flows so I don't have to put money back in, but I could if necessary. Since I have a VISA debit card on this account which I use for online purchases, I don't want any more money than necessary exposed to fraudulent withdrawal.

Thank you all for the responses. I know I haven't found anything in my research suggesting otherwise either.

When you do figure this out, I have a few clients that would love to have you write a letter to their lender saying they can safely withdraw any amount above this and the business won't be harmed.

I always keep the minimum in our business account as well. Between me and my wife, we have 2 LLC's setup for residential rental property and will withdraw once we receive the monthly rent from tenants.

I'm the opposite - I keep a lot in the business savings account, plus I have an investment account in the name of the business. Official reason is that I like to have a cushion. Real reason is that I don't want my wife to see how much is there, and if I leave it in the business, then she doesn't see it and thus spend it. I take out a decent paycheck twice a month, and the rest stays in the business. She's a teacher, which means that she knows less about money than our dog.

She's a teacher, which means that she knows less about money than our dog.

Dang. My wife is a teacher, too. If I said that, I'd be sleeping outdoors being swarmed by mosquitoes while our dog is nice and cozy inside.

I have taken control of our finances, simply because she stresses out too easily over it, but she is welcome to know everything about it. As a teacher, $500 to her is half of a biweekly paycheck. To me, it is a couple hours of time. She has not adjusted out of her teacher salary mindset and into the reality that I earn a very nice living, and that she does not need to stress about money the way she used to.

Disclaimer: I'm a Dave Ramsey ELP... his suggestion is 3-6 months of expenses. I think that's fair and safe for 95% of small businesses, but if you're super seasonal ... like a tax only practice, you would obviously set aside more.