Category Archives for "Profit First"

How to Remove the Temptation to Spend Your Revenue

You’re tired of not having a handle on your money. As an entrepreneur, you know all too well the consequences of poor money management—on you and your business. So you took a leap and set up Profit First, which is a step in the right direction. But you’re still overspending. You still have your hands in the proverbial cookie jar, and it’s time to stop.

But how do you remove the temptation of spending your revenue, in particular your growing profit and tax account? They look so tempting and full of money, but their whole purpose is to accumulate money. So let them do their job. Set up smaller plates, and limit your spending to your operating expense account. 

Are you not completely sold yet? Then, let’s take a look at some other ways to remove the temptation of spending your sweet, sweet revenue early and (possibly) on the wrong things.

Okay, but I want to take a class.

That’s great! You’re a person who cares about personal and professional development. You’re constantly investing in yourself because you love to learn and know that the more you learn, the stronger your business will become. 

You don’t have to sacrifice that important part of yourself because you use Profit First, but you need to plan for it. If you know you want to incorporate personal development into your business, set up an additional account for it. 

Once you have all of your other accounts on target, start your personal development account. You don’t have to save much, but as you continue to put a small percentage away, you’ll be ready when you’re ready to pull the trigger on that course you’ve been eyeing—and you didn’t have to compromise your other accounts to participate. Score!

Okay, but it just looks like SO much money is just sitting there.

Well stocked profit and tax accounts can look pretty tempting. They are the glistening oasis when you’ve been walking the financial desert for weeks on end. Andrew Jackson and Benjamin Franklin are waving at you as they sip frozen cocktails by the pool, and there you are, begging for water, dragging yourself through the hot sand. But I have four words for you: Snap. Out. Of. It.

Those accounts aren’t just sitting there trying to tempt you. They serve a purpose. A very important purpose that you know you need. If the temptation is too great to ignore, try moving your profit account and your tax account into different banks. Restrict your access and temptation. Trick yourself into honoring your desire and need for financial security if that’s what it takes.

Okay, but I’m not sure I can do it alone.

If you’re having a hard time holding yourself accountable, that’s okay. But did you know it takes more than two months to create a new habit? And not to mention the new behavior patterns needed to overcome decades of money mindset habits.

But old habits or impulsive spending don’t mean that your Profit First journey is a total loss. Find an accountability partner. If you are struggling to create accountability within yourself, find a friend or biz bestie who you can call with you are a step away from clearing your account and heading to the sale on the gym equipment. 

Make sure your accountability partner understands your financial goals. In addition, this person should be supportive of the place you’re in emotionally and the challenges you’re facing. 

Creating new behavior patterns is challenging, even on a good day, so be compassionate with yourself. If you are struggling to keep your financial promises to yourself, think of new ways to make it really inconvenient for you to access your accounts. Maybe you don’t sign up for online banking or have an obnoxious password you hate typing in.

The important part is to keep your commitments to yourself and realize you committed to spending out of certain accounts when you set up Profit First, so you need to keep it that way. Future you will thank you for it.

How to Pay Off Debt in Profit First

Debt feels suffocating. Your financial walls are closing in on you, and you’re ready to get rid of your personal or business debt once and for all. But how exactly? We can and will help you with this. But before we get into our recommendations for conquering debt, we need to lay some ground rules. 

What does Profit First say?

First things first, you cannot pay off debt unless you are profitable. So how do you get profitable? By setting up Profit First, of course. Before you create your plan to pay off debt, you need to make sure all your Profit First pieces are in order. This way, your business will continue to run smoothly while you achieve your financial goals.

What pieces do you need? Take our Profit First Assessment and get a list of what accounts to set up!

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Getting started with your debt

Step one to taking control of your finances is to control spending. By running and analyzing an expense report, you will fully acquaint yourself with every financial transaction in your business. You’ll gain a deeper understanding of where the money in your business is going and how you can control your spending.

The next step to paying off debt with Profit First is to understand the intention behind your accounts and allow yourself some grace. This is true whether your debt is in your business or personal finances.

The minimum payment of your credit cards, loan payments, or whatever type of debt you find yourself in comes from your operating expenses. Your bill is covered at its minimum each month. Any additional payments to the principal come from quarterly profit distribution. 

Here comes the “grace” part. Just because you are laser-focused on paying off your debt, don’t forget to take some of your quarterly profit and have a little fun. You work hard. By allowing yourself some wiggle room to have fun once in a while, you’ll stave off burnout, so you’ll stay strong for the long haul.

Now that you have the Profit First debt-busting basics down let’s look at a couple more “must-dos” when managing your money.

Why would I save to a savings account if I’m trying to pay off debt?


Let’s get real for a second. Debt comes from spending too much before you have it. So make sure you don’t make a similar mistake by aggressively paying your debt down before you have other financial safeguards in place, i.e., an emergency savings account.

For many clients, the tendency is to put all of their profit toward debt as quickly as possible. We like where your head’s at, but what’s the point of paying off your debt if you are one big emergency away from creating more? 

What happens when you’ve paid off all your debt (without emergency savings in place) and your HVAC breaks? You’re right back where you started, except this time, you’re more frustrated and in debt than you were previously. 

Creating an emergency savings plan does prolong your journey to becoming debt-free, but it’s the only way to ensure you stay that way once you get there. Unfortunately, emergencies do happen—and usually when you least expect them.

What can you do in the meantime?

Your small plates are in place, you’re paying minimum payments from operating expenses, and you’re building your emergency savings account. Here are four debt management basics you can implement while you’re saving. (These aren’t Profit First principles, just good old-fashioned best practices.)

  1. Call your lenders. Ask if there is the option to refinance credit card debt to lower your payments or ask about the possibility of getting a better interest rate. There is no harm in asking.
  2. Transfer balances. In the short term, you will have transfer fees, but in the long term, you’ll save because you’ll lower your interest rate.
  3. Explore the possibility of your business getting a bank loan to pay off credit card balances or other debt.
  4. This is the big one: You need to have the discipline not to use your credit cards again. You are doing all this work. Don’t let yourself end up in the same position in the future.

Managing debt is a beast. But the struggle toward financial freedom is underway. You’ve set up Profit First and created emergency savings. Now all that’s left to do is stop blaming yourself for being in your current financial position. 

No matter how much you might hate your debt, realize that it gave you experiences that have brought you to where you are today. Your debt afforded you opportunities, but now that you are making a profit, you don’t need it anymore. So leverage the income you have, say thank you to debt, and show it the door.

Planning for Taxes if Revenue Increases

Planning your tax liability can be tricky when done right. To do it accurately, you need accurate records and a tax pro. And even then, it’s not precise.

One of the things that make projecting your taxes difficult is the fact that your tax liability is affected by multiple factors, like income from other sources, marital status, family size, medical expenses, homeownership, etc. And since the end of the year has not arrived yet, you have to forecast (or guess) what your profit will be at the end of the year.

To simplify knowing how much to pay in quarterly estimated taxes, the IRS wants you to pay the tax balance for the previous year in quarterly installments (or 110% of the previous year’s tax balance if your adjusted gross income is greater than $150,000 if married filing jointly).

But what happens if you have a revenue spike? While the IRS’s method is designed to be simple, it doesn’t account for drastic changes in income or profit. Its method will help you to avoid a penalty, but you still must have the remaining tax balance paid by April 15.

As stated earlier, the way to get the most accurate estimates for your tax liability if your income spikes is to have a tax planning session with a tax professional who can give you estimates based on accurate and up-to-date financials. 

But here’s a simpler way to stash away extra dollars for taxes in the event your income increases so you don’t have to worry if your tax estimations are a bit off: Use the Profit First system.

Generally, we set aside 15% of revenue for tax reserves. Being that this system is based on percentages, the amount in your Tax bank account will vary in proportion to the income that you generate. If you make a little money, you’ll have a small amount in the Tax account. If you make a lot, then you’ll have more in your reserves. Which is exactly what you need.

This is by far, the simplest system to making sure you always have enough in reserves to cover your income tax liability, no matter how much or how little you earn. Continue to make your quarterly estimated taxes based on the tax liability from the previous year, and you should have ample cash in reserves to make up the difference if needed.

To get the most accurate percentages to set for your Tax account (and any of the other core accounts), we’d be happy to help. Just reach out for a consultation.

How to “Fix” Your Sales Challenges: Fix This Next Series

The best way to identify your Next Vital Need (what to fix next) is to take the assessment. And if the assessment tells you that you need to fix your sales, read on!

Unpredictable sales are frustrating, especially when that rollercoaster cycle leads to unpredictable profits. After all, operations expenses are usually relatively stable. So when you’re not bringing in enough revenue to cover expenses (after your profit and owner’s pay allocations, of course), you blame sales.

That’s a fair assumption. But there’s more to establishing predictable sales than simply making sales month over month.

If you feel like you’re experiencing a challenge with your sales or you’re finding that you just don’t seem to have much left in your OPEX account each month, it’s time to “fix” that sales challenge.

But again, it’s not about making more sales. It’s about making the right sales from the right people so that you can live the lifestyle you want.

Do You Know Your Lifestyle?

Being able to support yourself and your family is important, right? We’re all for paying yourself a living wage, but do you know what that looks like for you? It looks different for everyone depending on where you live and what lifestyle you want to maintain. Figure out how much you need to live comfortably while also eliminating debt and putting some cash away for savings. Then reverse engineer the numbers to determine what you’ll need in sales to make that happen. Consistently.

Of course, more sales isn’t necessarily the answer if you’re not selling enough to take home what you want. There are a lot of factors to consider here, including reducing expenses. And when you’re looking at your numbers on a regular basis, you can easily calculate exactly how much you need to make in sales in order to fund your owner’s pay account appropriately.

Are You Attracting the Right People?

You’ve likely heard of the ideal client and the importance of knowing who that is. Once you know who that person is, are you doing the things you need to do, in the right places, to get them interested in your services?

It’s not enough to advertise or create content for your audience. You need to show up in the places where your ideal clients show up so you can provide value and grab their attention. That means being an active participant, like guesting on podcasts your people listen to or commenting on social media content, responding to your subscribers’ emails, etc. And not just half-hazardly either, but with intention and in the places where you know your “right people” are hanging out. You don’t need just anyone to join your gym or visit your studio; you need the right people to do that.

Are You Converting Those Prospects?

Once you attract the right people, you need to convert them into customers–and repeat customers if that’s your business model. It’s not about making the sale at any expense; it’s about selling with integrity to the right customers.

It’s not your responsibility to be the hero of your customers’ challenges; it’s your job to make them the hero and guide them along the way. This allows you to focus on the potential customer, not on making the sale–thereby eliminating the pressure on you or your salesperson to make the sale. After all, you may not be the best solution for everyone. And wouldn’t you rather convert the people for whom you are the best solution?

Do You Deliver on Your Commitments?

No one likes to feel let down, and sometimes clients aren’t happy–but they won’t tell you that. There are a lot of reasons why you may not deliver on the promises you gave during the sales process, not the least of which being overextending yourself (which we often do in an effort to make more sales).

Depending on your business model, the goal should be to delight your customers so they’ll continue buying from you. If they’re not happy they will likely take their business elsewhere. But the reality is that it’s much easier to retain a customer you already have than it is to find a new customer.

Are Your Clients Delivering?

A sale isn’t really final until both sides have delivered on their promises, and sometimes a sale remains incomplete indefinitely. This includes the client paying in full for the delivered product or service. You’re a business, not a charity, and clients need to fulfill their obligations to you.

If your business is a retainer model, you’ll notice that some clients will pay later and later as time goes on if they’re not on an auto-pay system. And if you don’t have a delinquent collection system in place, you’ll want to get something set up.

Looking at your own business from a different perspective can be difficult. If you’re struggling to determine where your sales breakdown is, let’s talk! We have experience helping clients like you get on the right sales path so they can live the lifestyle they want. Contact us today!

Three Tasks to Include in Your Quarterly Financial Routine

Three months can fly by—especially in your business. It’s that time again for your Quarterly Financial Routine. You do have a quarterly financial routine, right? If you do, awesome! If you don’t, you’re in luck. We’ve compiled our top three tasks that should be a part of every business’s quarterly review.

In addition to the quarterly tasks, we strongly recommend using your quarterly quiet time to review the progress of your yearly goals. Revisiting the goals you set back in January every three months allows you to stay on track, reflect on your priorities, and hold yourself accountable.

Now let’s take a look at the top three quarterly tasks we recommend in your business.

Task #1: Profit distribution analysis

You know your business is making a profit, but do you have a clear understanding of your KPIs? Key performance indicators are built into the Profit First model. By creating a spreadsheet for profit distribution every quarter, you can more quickly and accurately track the performance of your key accounts and begin to compare any fluctuation quarter over quarter.

If your business is growing, take a close look at your distributions from each account, then consider any notes you have made in previous quarters and adjust your distributions accordingly. If you’re finding that your operations expenses have increased, determine why and whether you need to increase your allocations there. Ideally, you have a good handle on your expenses and can ultimately increase your owner’s pay and profits instead.

Spending time with your KPIs will help you develop a broader understanding of your business operations, which leads to a positive impact on your owner’s pay percentage.

Task #2: Owners pay adjustments

The goal of Profit First is to make sure you are paying yourself what you need. A quarterly analysis is a crucial step towards ensuring you allocate the proper owner’s pay percentage based on any account fluctuation.

Take time at the beginning and end of each quarter to analyze and record any changes to the buffer in your owner’s pay account. The cushion in your account should be increasing over the quarter, meaning you’re allocating more to that account than you ultimately need. If you have a steady increase, it’s time to raise the amount you actually pay yourself.

However, if your revenue is down, you might be eating into your buffer. It’s natural to think the easiest solution is to adjust your owner’s pay allocation down—don’t do it! If you notice the drop mid-quarter, stay the course, trust the buffer, and look at your financial standing as a whole at the end of the quarter.

As I mentioned, Profit First’s goal is to make you money. If you are at your minimum lifestyle lock number, do not adjust down without referring to Task #3 or reaching out!

Task #3: Expense analysis report

Whether you’re practicing Profit First or not, running a quarterly expense analysis report by vendor will tell you everything you need to know about who you’re paying, how much, and when.

This report offers a comprehensive reminder of every vendor you’ve paid throughout the quarter. This is the time to evaluate if you are still getting value from their services. Is there another vendor who does the same thing that you can go with instead? Or do you have the potential to eliminate an expense?

Doing this analysis can also bring to light duplicate charges, increased subscription prices, or subscriptions that you no longer use. Identifying these will help you to save money in the long-term.

Bonus tip: If you are thinking about decreasing your owner’s pay (like we talked about in Task #2), don’t do it! Decreasing expenses is the key to keeping your allocation intact.

By creating a regular quarterly analysis of your business, you empower yourself to make educated decisions based on experience and expertise. Without trust in the system, you might end up making impulsive financial decisions that end up hurting you or your business in the long term.

You don’t have to wait for a special day to analyze your financial health. Schedule a quarterly date with your spreadsheets and make the most out of your relationship. Getting up close and personal with your finances will help you feel more confident, prepared, and empowered to develop your business needs’ money mindset!

Are You Making This Profit First Mistake?

There are several mistakes that a business owner can make while implementing the Profit First system into their business. And chief among them: not following the instructions to a “T.”

A bit about me: My wife loves it when I cook (which I could do more often), and she often likes what I cook. And I tell her, “I don’t cook. I simply follow the instructions.”

Now I’m nowhere near my mom or grandma’s level of culinary genius; they don’t use or need measuring utensils the way I do. But, my food almost always comes out good because I follow the instructions to a “T,” despite my lack of experience.

The same is true for following the Profit First system. It works well. And I suspect you know it works well too, or you wouldn’t be reading this article. It works because it’s based on time-tested, solid financial principles.

(It also works for personal finances, if that’s something you struggle with.)

Now, in terms of which points in the system should be adhered to the most closely, at the top of the list is limiting business spending to what’s available in the OPEX account.

In my humble opinion, being able to keep business spending to what’s available in OPEX (i.e. making the hard decisions when it’s low, avoiding using funds from other accounts to handle the business’s spending, etc.) is the crux of the entire system. If everything else is done correctly except for compromises in this area, you will not get the promised results. It’s that simple. We guarantee our profits by keeping strict limits on what the business can spend as a percentage of revenue.

It is super important to be watchful and vigilant over monitoring your business’s monthly expenses. We must be proactively innovative and creative when it comes to limiting our expenses. I’m not suggesting we be cheap, but we should cut all unnecessary spending and make sure we are receiving maximum value for every dollar spent. And if it comes to it, we must make the hard choice to cut or reduce whatever is necessary to stay within the amounts of the OPEX account whenever there are more expenses than cash available within that account (with emphasis on “within that account”).

Life will happen, and there are times when we’ll have to adjust, although not frequently. And that’s OK. But there are also ways that we can preempt large or unexpected expenses:

  1. In using the Profit account, 50% will stay in this account as an emergency fund. So, any emergency funds needed should be available to your business if you’ve been running the system for a few months/quarters/years. But you can only use it for business spending if it’s a true emergency.
  2. Establish a special account for large expenses. For example, if you have an annual recurring expense that you often forget about until after they take funds from your account, you can consider opening an annual expense account that will hold the funds for the purchase each year without sacrificing the OPEX budget, your pay, profit, or taxes. Also, If you need to purchase expensive equipment or have regular maintenance needs, you can establish an account that will have funds available for your equipment purchases or routine maintenance.
  3. While this isn’t a direct Profit First strategy, proper insurance will protect you from certain emergencies and allow your business to stay viable under extreme duress. We recommend having a conversation with a legal representative and having a quality insurance policy to protect yourself and your business.

So, follow the system. Don’t take shortcuts when implementing Profit First. The system is already simple and broken down to its simplest form for maximum results; there’s nothing added to it that isn’t necessary. If you want the results that the system promises, just follow the system and instructions to a “T.”

If you need help implementing Profit First in your business, let’s talk!

Prepping Your Wellness Business for the Summer Slow-Down

Summer is getting closer. Days are longer. The sun is shining, and people are out!
With the pandemic (hopefully) in its last legs and the increased availability of vaccinated friends and family to hang out with, your business might once again be susceptible to the dreaded summer slow-down.

Granted 2020 threw any “normal” business pattern out the window. Still, if owning a business through a pandemic taught us anything at all, it’s to always be prepared—even for the unexpected. Of course, maintaining a solid paycheck is important, even when your revenue is on a roller coaster.

By prepping your business today for the future, you’ll be ready for next summer and all the summer slowdowns after that!

Utilize your time

While an influx of free time in your business is a nice change of pace, it can also come with the anxiety-inducing stress of being uncertain of when and if the business will come back.

The best way to combat any down-time anxiety is to get busy. Having a slow season is a perfect time to get those project ideas off of the shelf and put some work into developing your business instead of always working in your business.

Utilize the time you have to create new revenue models—which leads me to my next point.

Adjust your revenue models

The most failsafe way to ensure you never have a summer slow down is by creating a monthly recurring revenue model. When your clients take a week or two off to vacation with their families, you still get paid.

But how do you incentivize your clients to pay even if they aren’t using your services? You might be thinking of a discount, and you’re right. But we are NOT talking about discounting your services.

There are many ways to entice your clients to capitalize on a pre-pay model: retail discounts, faster response time, exclusive access, add-on bonuses. The list goes on.

We have worked with massage therapists who offer a regular monthly massage to their pre-paid clients. If they don’t use their massage that month, they can have two the next month. This type of model was HUGELY helpful during the pandemic—clients were racking up unused credits, and business owners could count on the monthly revenue.

You know your business better than anyone else, so get creative. The important part is to create a way to have an income you can count on even when the lean times take hold.

Create a summer account

You’re still coming up with the perfect monthly recurring offering for your business, but that doesn’t mean you can’t proactively prepare for slower summer months.

Many dance studios will run camps, or gyms can run summer workout initiatives. Those are great ways to keep income flowing. If you find yourself without monthly recurring offerings or the ability to run camps, the next best way to help over the summer is to set up a summer savings account.

Figure out the bare necessities you and your business need to get through the summer. You know you’ll need rent, AC, insurance, admin payroll, etc., so after totaling your amount needed for necessities, divide that number by nine and allocate it into your summer account the other nine months of the year.

By creating an extra summer account, you know your basics are covered. Any additional revenue that comes in is “extra” and will cover payroll. If you have a camp over the summer, your basic needs are covered, and teacher payroll will be covered by camp revenue.

It’s hard to enjoy time off with your family if you’re constantly worried about how rent is getting paid. Ensuring your operating expenses and owner’s pay are accounted for no matter what the season brings, you create a more substantial, more sustainable business for you and your clients.

If this all seems overwhelming, reach out. We’re happy to help.

How to Leverage Team Members in Your Wellness Business

It’s no secret that time management is crucial to your success as a business owner. If you find yourself wearing all the hats all the time, you know that you need to bring on new team members. But how do you know when it’s time to bring on your next hire, and how do you make the most of your new employees once they get there?

Growing your team, if done correctly, requires preparation—emotionally and financially. We’re going to look at three ways to prepare yourself, your business, and your team for successful growth while maximizing your ROI and freeing up your time and brain space. 

Releasing control

Your business is your baby. But the truth of the matter is you won’t escape the daily overwhelm if you don’t build a team. One question I hear from a lot of clients who are ready to grow is “What if my team doesn’t do their tasks in the same way I always have?”

Spoiler alert: your new team members won’t do things in the same ways you do—and that’s a good thing. 

By expanding your team, you open your business up to new, possibly better, ways of operating. We can’t know everything all the time. Making room for new people, new ideas, and new ways of completing tasks enriches your relationships and your operations. 

To make the most of your new hires, you need to create systems and develop your own leadership skills. Establishing an infrastructure for growth can be challenging, but ultimately a very profitable one.

Just remember your team will make mistakes. They won’t get everything right the first time, but chances are neither did you. 

Hiring your first employee

Take a second to assess the lowest dollar tasks you are performing in your business. Chances are they are ALL administrative. For most business owners, hiring a virtual assistant or administrative assistant is a great first step toward building your team.

Start by identifying the back end or customer service tasks that must happen. In the past, I’ve delegated very routine marketing tasks to administrative assistants. Reaching out to potential clients on Facebook can be a time-consuming task. Either you spend time you don’t have halfway connecting with people because your attention is drawn elsewhere OR you can template your best conversation starters and tell your VA to go get ‘em! 

By documenting and systematizing your tasks, you ensure the transition is as seamless as possible for your business—and your new employee. After identifying the tasks you’d like to delegate, create a quick video of yourself in action, and offer that as training to your new hire!

When you’re no longer consumed by the onslaught of administrative tasks, you are free to sell, generate additional revenue, or provide an additional service to your clients. The return on your “free” time is massive

Preparing for additional team members

Your administrative assistant is in place, but how do you know when it’s time to bring on your next trainer, massage therapist, or esthetician? This decision completely depends on the business, but here is how to make sure you’re not caught with your financial pants down:

Using the Profit First model, create a new bank account, and start saving for your future team member. When you can allocate their salary to the account each week, it’s the right time. 

By knowing their salary and banking that amount every month, you are creating the one-month salary buffer we recommend, but you are also getting an accurate view of how far you potentially have to go before you’re ready to financially commit to a new team member.

Once you can easily bank their salary month to month, you’re ready! 

If you find yourself struggling to stash the money away that you need to grow your team, and increase your peace of mind, reach out to us. We would love to help you implement Profit First so it works for you

When you’re feeling overwhelmed in your business, growing your team seems urgent—and sometimes it is! But the more you can prepare yourself and your finances before adding on a new team member, the better the ROI is for you, your business, and your new employees. When you make deliberate financial and training decisions, you create a team as loyal to your business as you are! 

How to Project Taxes Accurately

Projecting your tax liability can be very tricky.

First, the tax law is constantly changing, which can cause your tax liability to change, even if all other factors remain the same.

Also, the final tax bill that business owners receive often includes income from sources outside of the business, as well as deductions, credits, and penalties outside of the business.

And to complicate it further, let’s just say there’s a reason the IRS calls them “quarterly ESTIMATED taxes.” You can’t know your tax liability until you close your books at year’s end.

So how do we estimate, or project, how much a business’s taxes will be?

Proactive Tax Planning

The best and most accurate way to project your tax liability is to have tax planning sessions throughout the year with a tax professional.

Tax pros keep up with the constant tax law changes and can include business and non-business factors to provide very (but not completely) accurate projections throughout the year. A tax pro can also proactively look for tax savings opportunities to make sure you’re keeping your taxes as low as possible.

The IRS Method

First, the IRS doesn’t project your tax liability; it suggests you pay your estimated taxes for the present year, based on the tax liability of the previous year. So, if last year’s tax liability was $4000, the IRS wants you to pay $1000 in quarterly installments throughout the year.

This method (for paying estimated taxes) is better than nothing, but if you have a drastic increase in income, you could still end up with a very high tax bill using this method alone.

Profit First Method

The Profit First cash flow management system doesn’t project your tax liability either (which is very complex). But what it does really well is to make sure that you always have enough in reserves for whatever tax bills come your way.

The Profit First system works off of percentages, so you’ll have a lot of money in reserves if you did well, and not so much if you had a bad year. Either way, you’ll have enough in reserves based on the performance of your business. And you don’t have to be a tax nerd to get it right.

At Fit For Profit, we can help you with implementing Profit First into your business so you can feel secure that you’ll have enough saved for taxes. Fill out this form and book a call to get started.

Seven Questions to Ask When You’re Hiring a Bookkeeper

Do you need help managing your growing business? Or are you just tired of staring at QuickBooks? Regardless of your motivation, finding a bookkeeper is a significant first step toward freeing up your time and streamlining your financials.

But finding the perfect bookkeeper for your business? Easier said than done.

With your business’s financial health relying on your decision, we’ve gathered what we think are seven of the most important questions for you to ask when hiring a bookkeeper. Asking the right questions up front can be the difference between going the right direction or veering your business off course.

Here are seven questions that will help you decide if a bookkeeper is right for you:

What should I expect regarding the project scope?

Chances are you know exactly what you need your new bookkeeper to help with, but most bookkeepers offer a wide variety of services. Even though in your mind what you need might go without saying, it’s vital to talk through your needs before agreeing to work with each other.

Creating clarity around business needs and setting clear expectations will ensure a smooth-running partnership.

You might want your bookkeeper to send 1099’s to your contractors or take care of your allocations, but without a comprehensive (and agreed upon) scope upfront, you might be asking for something that your new bookkeeper is not prepared to give. At the same time, you may need something that you hadn’t considered yet!

How many other businesses do you serve in my industry or at my income level?

Will your new bookkeeper understand the specific needs of your business or industry?

Regardless of previous work history, ask if they have experience with businesses similar to yours. Asking about who they have kept books for in the past allows you to ensure that they have an understanding of your unique business needs—and enables you to anticipate potential obstacles in your work relationship.
Finding out more about their background will help create a more seamless experience for you and them.

What are your professional qualifications?

The right bookkeeper for your business doesn’t necessarily mean they have to have an MBA in Accounting, but they need to have training and awareness of accounting principles.

The reality is there are no certifications necessary to become a bookkeeper, which is why asking about professional credentials and qualifications is so important! Don’t assume the depth of experience. Just ask.

Of course, we believe so strongly in using Profit First bookkeeping principles that we’re Advanced Certified Profit First Professionals. If you want to use Profit First, we recommend finding a certified pro!

How do you communicate with clients?

You’re busy. That’s one of the reasons you need a bookkeeper. The last thing you want is to hire a bookkeeper who will monopolize your time with ineffective (or excessive) communication that frustrates you and pulls attention away from growing your business.

Ask your bookkeeper-to-be how they typically communicate with their clients and why they have decided that is the most effective communication form.

You are looking for a candidate who is effective while being concise and respectful of your time and communication preferences.

How will you keep my account information secure?

This is a big one! You are sharing sensitive information with your bookkeeper. You need to know they have a plan for your safety. For our clients, we use a secure portal called SmartVault to transmit information.

Your information’s safety is critically important to us, and any bookkeeper worth their salt will feel the same.

Will I be billed based on hours?

Bookkeepers may charge on an hourly basis or at a fixed retainer rate. We prefer to work from a fixed rate for a few reasons.

We want you to be in control of your finances. Part of working from a fixed rate ensures that there are no surprises on your end. You know what’s coming, and you can prepare accordingly.

If you have a unique project you’d like addressed, we will scope the project ahead of time and adjust our rate from there. We want to help you create financial stability in your business in every way.

Will you have access to our bank accounts?

Different bookkeepers work differently. At Fit For Profit, we don’t perform any financial transactions on your behalf because we don’t ever want there to be a question in your mind about any transactions.

Some bookkeepers feel differently and will perform your allocations for you. We feel that this takes ownership of your numbers away from you—which is the opposite of how Profit First should feel.

Fit For Profit is all about making your finances work for you. We use a third-party app to retrieve your statements for us and we do everything we can to make it easy on you.

The right bookkeeper should be passionate, knowledgeable, and aligned with your needs and vision. Take the time to ask questions and explore before deciding on who will be best for your business. We know you’re busy, but finding your dream bookkeeper will take a little time.

If you have any questions or are still feeling unsure, give us a call. We’re always happy to help.

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