Profit First

Do you struggle with organizing the money coming into your business, or even your home?

Your answer is most likely ‘Yes.’ The good news is that is okay! Most people do struggle with and have to work hard to keep their money organized.

For me, my family, and my business I found a way to organize our income and outcome, based on two different systems. I’ll give the credit to my good friend and fellow business owner Jeremy Crabtree, as well as author and entrepreneur Mike Michalowicz.

Again, this system was derived from these two men and their ideas, and then tweaked and changed to fit my family and business’s needs.

Having a system that organizes my incomes and outcomes has been a wonderful way to relieve the stress that typically occurs when dealing with money, and the best part is it only takes 5 minutes once a week! Because this system has worked so well for us and I want you to find what works for you, I am going to list the steps we took to get organized below.

Before we started, we made multiple accounts within our main account to help us organize our money.

The first account was our income tax account. Within that account, we took 7% of our gross income and transferred into this account every week.

The second account was designated for bills and rent. We transferred 3% of our gross income into this account every week.

The third account we created was for sales tax. This obviously is specific to where you are located, but for us, it is 10%. This account received 10% of our gross income every week.

The fourth account is our profit account. The idea behind this account is that we pay ourselves first and force ourselves to save money. We personally started at 2% of gross income and have overtime climbed to 10%.

The fifth account we have is for the owner’s pay. This is simply my paycheck. I transfer the same amount of money, whether we do very well or not so well, into the same account every week.

These are the ways we organized our business and our home’s finances. This keeps us organized and able to know what we can spend as a company. For example, let’s say it’s time to pay for income taxes, I simply send my accountant to the ‘Income Tax’ account and the money is there. There is no need to have that income tax money sitting in your main capital account.

Michalowicz’s book ‘Profit First,’ goes way more into detail and explains the methods and ideas behind this organization. My method mentioned above is a simpler, more dumbed-down version of what he explains in his book. I highly recommend you read his work and use it to help you and your business develop more organized finances.

After finding what worked for me and my business, I encourage you to seek out organizational strategies and begin implementing new ways of organization in your business’s finances.