Profit First: A Simple System To Transform Any Business From A Cash-Eating Monster To A Money-Making Machine

After setting up this new checking account at your bank, nickname the account PROFIT, and from this moment forward from any deposit you put into your normal checking account, transfer 1 percent of that deposit into your PROFIT account. Then proceed with your business and processes and money management as you have in the past. Just add to the PROFIT

you set up one Profit First account, and you transferred 1 percent of your current money.

When less money is available to run your business, you will find ways to get the same or better results with less. By taking your profit first, you will be forced to think smarter and innovate more.

1 percent allocation for the PROFIT account (Why 1 percent? You’ll find out in the next chapter), 50 percent for OWNER’S COMP, and 15 percent for the TAX account. Use quarterly adjustments to step up to higher percentages and nudge your business closer to the TAPs recommended in this book.

Part of the problem is bank balance accounting—looking at the money in your bank account as one pool from which you can operate your business without first addressing tax issues or your own salary, never mind profit.