What is Profit First for Small Business | Incite Tax

So the first thing we want to address is, what is Profit First? It's a cash flow management system that business owners can plug on top of their normal accounting system that allows them to manage their cash. It helps you take advantage of existing human behaviors that other systems might want you to fight, but Profit First actually embraces it. And so some of these human behaviors that it emphasizes is this habit that we have as business owners of checking our daily bank balances. Most people manage should they write a check based on their balance in their checking book. So, right, let's figure out how to make that work. It also utilizes some dieting principles. We've all heard from our moms, eat everything that's on your plate. So we do that. We fill up our plate, we eat all of it. The challenge is, is that if you consume all those calories on one gigantic plate, You're gonna gain weight. Dietitians have simply said, look, we can't fight that behavior, so let's just use smaller plates. You're still gonna fill it up, you're still gonna feel full, but you eat less calories. We do the exact same thing with our business in the way that we manage our cash. Most of us have one giant operating account, and that's it. And we put all of our cash in it, and that cash is used for everything. So what happens is we consume all the cash in that account. Profit First says, let's use these dieting principles. Let's have smaller plates. So you're going to create a plate for your profit because you should pay yourself first. We're going to create a plate for your owner's pay because you should be paying yourself a market rate for the job that you do within the business. You should be setting aside a plate for the tax liability that you're going to end up having. So these are all smaller plates that we have, and now all of a sudden you're left with An operating account that has cash that you can use for the business. Now, some people at this point say, hold on, I can't run my business off of that. But I bet you can. And that's where this other human behavior comes into play. Toothpaste. If you think about how we utilize a tube of toothpaste, most of the time when you open up a new tube and you're putting ample amounts of toothpaste on that toothbrush, And you don't really think about it. But how creative do we become when we get to the end of the tube of toothpaste? And we roll it up, some people cut the ends off, I like to just suck it straight out of the tube. We're going to utilize every last drop of toothpaste, all while paying very close attention to not using any more toothpaste than I actually need. Same way works with our cash. So now that we have these smaller plates, And we have the cash left in the operating account that after telling ourselves, this is how much money I'm determining I'm going to pay myself, I now have this money left in this operating account. You will find ways to continue to grow your business and run it the way you need to, all while having these other places already set up, which generally give a lot of aches to most business owners. How often do you worry, am I going to have enough money for taxes at the end of the year? I don't even know what that's going to be. With Profit First, you don't have to think about it because you've set aside the money all throughout the year. And most importantly, you pay yourself first. Too many business owners are not paying themselves anything or a small amount, which leads to frustrations. You're the most important employee in the business. You need to pay yourself first. So that's kind of what you're going to get into when you look at this Profit First system. We'd love to sit down and chat with you about your situation and how Profit First can apply to your business.