In many cases, says Mark Balasa, a Chicago financial planner, the answer is yes. Of course, how much cash a company needs depends on its age, industry, and prospects. N.J. And a new or fast-growing company may not be able to spare any cash if it's in a competitive field or is a big consumer of technology. The amount varies from industry to industry, but a rule of thumb says you ought to keep a dollar of cash on hand for every dollar of bills due within 90 days. Once you're over that hurdle, you need to pick the right method.
Goodness knows, there are plenty of wrong ones.
Borrowing from your company, for instance, is no bargain, because Federal tax rules require you to pay close to market interest rates. If you're renting office space, consider moving to a building you and your partners own. This creates a steady stream of income, and unlike other landlords, you don't have to worry about finding new tenants every few years. Best of all, rental payments escape payroll taxes if they aren't excessive. Owning the building personally has two other major advantages.