Our favorite time of year happens four times: at the end of each quarter. If you’re following Profit First, this is when you, as the business owner, get to take half of what’s built up in your profit account as a distribution (a bonus, if you will) to yourself.
That’s right, every 90 days you get to share in the profits of your business.
This is a guest blog post from Howard Polansky of Cash Flow Coach.
I love to analyze numbers. Making projections about how much money this will grow at X% over Z years is just easy for me. But I have to be honest and know I am driving myself crazy over that stuff. If someone asked me what numbers they should track if they could only follow one statistic in their own personal financial life, I would tell them to track their savings rate.
The big benefit of using the Profit First system is that you pay yourself first. You never have to forego paying yourself because that, and your profit, comes first.
At the same time, there are sometimes other parts of the business that demand your attention. Things like new equipment, large one-time or yearly fees, future investments that you may not even know you need yet.
No two businesses are alike, and each will have its own complexity. So while having the basic five accounts (Income, Profit, Owner’s Compensation, Taxes, and Operating Expenses) is important, sometimes we have other needs too. Thankfully, it’s easy to customize the system to meet the needs of your unique business, by opening additional, “advanced” or “drip” accounts.