Tomorrow January 11, 2022 at 7am PST
Profit first focuses on four tenets: multiple bank accounts, pay yourself first, transfer money into accounts and reap the rewards.
- Use multiple bank accounts (checking & savings). Most businesses have one checking account, where all the money is mixed together. It's best to separate money by purpose (operating expenses, owners compensation, taxes, etc) gives you clarity and a natural budget — without cumbersome spreadsheets!
- Pay yourself first (the profit part), then fund everything else. Determine what percentage of business income is needed to suitably fund each accounts bank account.
- Transfer money into the four bank accounts twice a month. On the 10th and 25th (or two dates you choose and stick to), move money from your Income account into the other accounts.
- Gain the rewards for giving every dollar a home. When you move money into the different bank accounts, this eliminates the temptation to spend funds for other purposes. It’s truly out of sight, out of mind concept.
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