- Sort business cash by when you will need it, not by where it happens to sit. One to two months of burn belongs in checking; everything else should be earning yield somewhere insured or government-backed.
- The FDIC limit is $250,000 per bank per ownership category. Insured cash sweep networks spread deposits across dozens of banks under one login, which is how startups keep eight-figure balances fully insured.
- Treasury interest is exempt from state income tax. For a company in a high-tax state, a T-bill ladder often beats a higher headline bank yield after taxes, and it has no insurance cap to manage.
Quick answer
Divide operating cash into three buckets by need date. Bucket one: one to two months of payroll and payables stays in your operating checking account, the only cash allowed to earn nothing. Bucket two: the reserve you might need within a year goes into a high-yield business savings account or an insured cash sweep, which extends FDIC coverage across partner banks. Bucket three: cash you will not touch for a year or more moves to a Treasury bill ladder or a government money market fund, where yield tracks the Fed rate (currently 3.75%) instead of a bank's discretion. The one-year Treasury currently yields 4.10%, and that interest is exempt from state income tax.
The default is the problem
Most businesses never decide where to park cash. Revenue lands in checking, bills get paid from checking, and whatever accumulates just sits there. At a typical big-bank business checking rate of zero, a company holding an average $500,000 balance forgoes tens of thousands of dollars a year, silently, while taking concentration risk above the FDIC limit at a single institution.
The fix is not sophisticated treasury software. It is a one-time sorting exercise and two or three account openings.
Bucket one: operating cash (0 to 60 days)
Keep one to two months of total burn in the operating account: payroll, rent, vendor payments, loan service. This cash needs same-day availability and zero friction, so yield is not the priority. If your checking account happens to pay interest, treat it as a bonus, not a reason to hold more there.
Current business checking options are compared on our business checking page, and the roundup of best small business checking accounts covers the fee and integration trade-offs.
Bucket two: the reserve (2 to 12 months)
This is the emergency runway and the tax money: cash you could plausibly need this year. Two good homes for it:
High-yield business savings. Online banks and fintechs pay competitive rates on business savings while the big banks pay near zero. See the best business savings accounts comparison for current options.
Insured cash sweep. Above $250,000, a single bank cannot insure your reserve. Sweep networks (offered by banks like Grasshopper and fintech platforms like Mercury and Bluevine) fan deposits across dozens of partner banks so the full balance stays FDIC-insured under one relationship. The mechanics, limits, and provider differences are covered in the startup multi-bank sweep guide and the Grasshopper vs Mercury FDIC comparison.
Bucket three: strategic cash (12+ months)
Cash beyond a year of needs can accept a little structure in exchange for better after-tax yield:
Treasury bill ladder. Buy T-bills maturing at staggered dates (say 3, 6, 9, and 12 months) and roll each as it matures. Interest is exempt from state income tax, backing is the full faith and credit of the US government with no insurance cap, and the ladder throws off liquidity every quarter. Build one with the Treasury bill ladder calculator.
Government money market fund. For cash held at a brokerage, a government money market fund tracks the Fed rate closely with daily liquidity. It is not FDIC-insured; the trade-offs against bank products are covered in the money market funds guide.
For a business in a state with income tax, compare after-tax yields, not headline yields. A 4.2% T-bill can beat a 4.5% bank rate once state tax is removed from the bank interest.
Which Setup Fits Your Business?
| Situation | Best next move | Why |
|---|---|---|
| Under $250,000 total cash | Operating checking + high-yield business savings | Two accounts, fully insured, minimal admin. |
| $250,000 to $2 million | Add an insured cash sweep | FDIC coverage extends across partner banks automatically. |
| Over $2 million or venture-funded | Sweep for the reserve + T-bill ladder for strategic cash | Insurance where you need liquidity, government backing where you do not. |
| Seasonal business with a known cash trough | Ladder T-bills to mature before the trough | Yield until the exact month you need the money. |
| All cash at one big bank earning zero | Move the reserve first | The reserve is the largest idle balance and the fastest win. |
Checking holds two months of burn, never more. Everything above that either earns a competitive insured yield or sits in government paper. If a dollar of company cash is earning zero and is not needed within 60 days, it is in the wrong account.
Size your reserve with the business cash reserve calculator and check how long your cash lasts with the cash runway calculator.
Quick answers
How much cash should a business keep in checking? One to two months of total burn. More than that is idle capital earning nothing.
Is business cash safe above $250,000? Not at a single bank. Use an insured cash sweep network to extend FDIC coverage, or hold the excess in Treasury bills, which have no insurance cap.
Do business savings accounts pay as much as personal high-yield accounts? The best online business savings accounts pay competitive rates, but the spread across providers is wide. Big-bank business savings typically pays near zero, so shopping matters more on the business side.
What did SVB change about this? March 2023 taught startups that a single uninsured banking relationship is an existential risk. The standard playbook now is a sweep network for insured liquidity plus a second institution or T-bills for everything else.
Sources
- FDIC deposit insurance coverage for business account insurance limits and ownership categories.
- TreasuryDirect for T-bill mechanics, auctions, and maturities.
- SEC money market fund rules for government fund liquidity requirements.
- SwitchWize business deposit rate tracking, reviewed against provider and market data on the date below.
Rates referenced on this page were verified on July 9, 2026. Live figures may update automatically through SwitchWize rate tokens and product tables. This article is educational information, not individualized financial or tax advice; confirm state tax treatment with your accountant.
Frequently Asked Questions
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