What Is a Sub Account?
A sub account is a segregated account nested under a larger account or relationship. At the most basic level, a sub account can be thought of as an account within an account.
Key Takeaways
- A sub account is a segregated account nested under a larger account or relationship.
- These separate accounts may house data, correspondence, and other useful information or contain funds that are kept under safekeeping with a bank.
- Each sub account is created for a specific purpose and might only be accessible to a particular person.
- Common uses include compartmentalizing financial goals, organizing company accounts, or investing retirement money in mutual funds.
Understanding Sub Accounts
A sub account is spawned from and linked to a primary account. These separate accounts could house data, correspondence, and other useful information or contain a balance of funds that are kept under safekeeping with a bank.
In general, each sub account is created for a specific purpose and might only be accessible to a particular person. Sub accounts holding capital operate under very strict guidelines, as funds can only be accessed in accordance with the terms of apower of attorney (POA)agreement approved and executed by the bank.
Example of Sub Accounts
Sub accounts serve many different functions and can vary considerably depending on where they are held and what their objectives are. The term could refer to multiple email addresses linked to one user or financial accounting methods and secondary accounts tied to a primary account with a financial institution (FI).
Here are some examples of how sub accounts might be used:
Company Bookkeeping
Entities set up sub accounts for a variety of bookkeeping and administrative purposes. A sub account is often used to compartmentalize larger accounts, thereby allowing for better tracking of various budget details and expenses. For ease of record-keeping, a company might set up sub accounts for each of its departments.
Sub accounts are a feature of robust financial systems, offering users more reporting options and other managerial benefits.
Savings
Many banks give their clients keen to squirrel money away several options, which includes the possibility of setting up several separate savings accounts under the umbrella of a main account. Each of these sub accounts will have a specific function, such as to save money for a child, to finance a special vacation, or to buy new appliances. By separating each fund, the individual should, in theory, find it easier to organize their savings and track the progress of independent financial goals.
Retirement
Previously, life insurance companies traditionally only offeredfixed annuitiesand whole or universal life policies to retirees. In exchange for depositing a lump sum, the holder of a fixed annuity is guaranteed to receive a predetermined amount of principal plus interest to be paid in regular installments throughout retirement.
Over the years, more flexible options have arrived on the scene, including variable annuities: a tax-deferred retirement vehicle that allows customers to potentially increase their income by participating in the equity and fixed-income markets. Instead of offering a fixed, guaranteed income stream, variable annuities chase higher returns, and the associated risks, of investing in mutual funds.
When purchasing a variable annuity, it is possible to choose from a selection of asset classes with varying degrees of risk profiles, including stocks, bonds, and money markets. These basket of investments are also known as sub accounts.
FAQs
A sub-account is an optional 1-5 character attribute that can be used to break down an account into multiple smaller accounts for better tracking of detailed budgets and expenses. A good example of the use of sub-accounts would be a departmental research account that has a sub-account for each faculty member.
What is a sub user on a bank account? ›
Sub-Users are individuals that you can enable to access information and features within your Digital Banking account.
What is the difference between a separate account and a subaccount? ›
Your main bank account is often called your primary account, while a sub-account is an “account within an account.” It's possible to make it so only particular people have access to this account, or that it's only used for specific purposes.
What is a sub account How can you create that? ›
A sub account is spawned from and linked to a primary account. These separate accounts could house data, correspondence, and other useful information or contain a balance of funds that are kept under safekeeping with a bank.
Can I pay off a sub-account on a mortgage? ›
How do I overpay a specific sub-account? expandable section. You can choose a sub-account to overpay within Internet Banking or our Mobile Banking app. If not, then we will apply your extra payment across all parts of your mortgage like your normal monthly payment.
What is the purpose of sub-accounts in QuickBooks? ›
In QBO, a subaccount allows you to break down an account into smaller accounts to track detailed income, expenses, and other account types. It is a helpful way to add more specificity to your financial reporting and ensure accurate tracking of different types of transactions.
What is the difference between a main account and a sub-account? ›
Sub-accounts operate similarly to main accounts but are associated with and exist under a main account. Sub-accounts feature your company's branding on their dashboards.
Can I have sub-accounts in my bank account? ›
You can create as many sub-accounts as you need to organize your money, such as separate accounts for business and personal expenses.
What is the purpose of using subaccounts? ›
Key Points
Sub-accounts are optional. Sub-accounts allow departments and units to track financial activity within a particular account at a finer level of detail. Departments and units will create and maintain their own sub-accounts, using a code meaningful to them, up to five alphanumeric characters.
What is the 3 type of account? ›
3 Different types of accounts in accounting are Real, Personal and Nominal Account. Real account is then classified in two subcategories – Intangible real account, Tangible real account.
A balance includes sub-balances when portions of the balance are valid at different times or when a portion of the balance is a loan.
What is the purpose of using subaccounts in Quizlet? ›
What is the purpose of subaccounts? To Track finances in more detail by grouping accounts in a logical fashion and showing a subtotal for those accounts.
What is a sub user account? ›
Sub-User means an Authorized User who has been assigned access to a Business Customer's Eligible Account by an Administrator. Sub- Users may be granted full or limited access to originate online transfers such as ACH transactions and/or wire transfers.
What is a sub standard account? ›
The. sub standard assets meaning refers to a category of non-performing assets (NPAs) on a bank's balance sheet. NPAs are loans to borrowers that have stopped generating income for the lender. It is due to the borrower having failed to make timely payments of principal and interest.
What is sub-account opening? ›
Sub-accounts can be used as temporary holding accounts for cash that needs to be deposited into your main account later on. This way, each deposit will have its own transaction history—making it easier for you and others in your company who need access to accounting information from time to time (such as auditors).
What is an ATT sub-account? ›
A subaccount is a Member ID email address set up under the account owner's primary Member ID. Only the account owner can create and manage subaccounts. For example, the account owner would have a primary Member ID email and their spouse or children would have subaccount Member ID emails.
What is sub-account charges? ›
Subaccount charges are fees for accounts within a parent account that are set up by a financial institution such as a bank, a brokerage, or an investment advisor firm. Subaccounts might be requested by a client to make financial activity by separate departments easier to track.
