What Is the Profit First Method? Explained Simply

The Profit First method is a smart way for small business owners to manage money. Instead of hoping there’s Profit left over at the end of the month, this method helps you take your Profit first, then run your business on what’s left. It’s simple, powerful, and designed to give you clarity and control.

Why the Profit First Method Is a Game Changer

Most small business owners struggle with cash flow. You’re bringing in money, but somehow it disappears. That’s where the Profit First method helps.

Instead of this broken formula:

Sales – Expenses = Profit

You use:

Sales – Profit = Expenses

By prioritizing Profit from the start, you build a business that works for you, not one that burns you out.

How the Profit First Method Works

With Profit First, you set up separate bank accounts to organize your cash:

  1. Income

  2. Profit

  3. Owner’s Pay

  4. Tax

  5. Operating Expenses

Twice a month, you allocate your incoming revenue across those accounts based on a specific percentage plan. It’s like giving your money a job — before it runs off and disappears.

Example of Profit First in Action

Say your business makes $10,000 this month. You might allocate:

  • 5% Profit ($500)

  • 50% Owner’s Pay ($5,000)

  • 15% Tax ($1,500)

  • 30% Operating Expenses ($3,000)

Now, instead of hoping there’s something left for you, you’ve already paid yourself and planned for taxes. Profit First helps you build a healthier, more sustainable business.

Common Profit First Myths

  • “I’ll start Profit First when I make more money.”

    → You can start with just 1%.

  • “It’s too complicated.”

    → It’s simple once you set it up.

  • “I already use spreadsheets.”

    → Profit First moves real money, not just numbers.

Who Should Use the Profit First Method?

  • Creative entrepreneurs

  • Consultants and coaches

  • Service-based business owners

  • Anyone who wants to feel their Profit finally

If you’re tired of asking, “Where did all the money go?”  it’s time for Profit First.

Profit First Bookkeeping That Works for You

I’m Venus Michael, a Profit First Certified Bookkeeper and founder of One21 Account-Ability, based in Central Texas and serving clients nationwide.

We help business owners like you:

  • Pay yourself regularly

  • Build Profit with confidence

  • Finally feel in control of your money

Ready to Try the Profit First Method?

📞 Book a discovery call and let’s talk about your numbers.

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