Profit First is absolutely worth the effort! The additional accounts are easy to manage and reconcile. More importantly, the Profit First benefits of instantly knowing what money is allocated to what purpose will have profound effects on the financial health of your business.

No. While the money allocated to these accounts does benefit the owner(s), the use of the money in each account is distinct. Owner’s Comp is for the owner’s salary or regular distribution. The Profit account is used as a quarterly bonus (and also functions as a rainy day fund, or be used for a “Death to Debt” quarterly distribution.) The Tax account is used to pay the owner’s taxes and any business taxes. So while the money does all benefit the owner, the accounts need to be kept separate so you can instantly tell just by looking at your bank balance what money is allocated for which purpose.

This is the “moment of reckoning”. The moment will come for every business when there is not enough money in the Operating Expense account to cover all the Expenses. You may NOT use other money. Your business is yelling at you and shaking you saying you CAN’T afford all these expenses. Reduce your expenses and find a way to pay what you owe when the next allocation to OpEx comes in. But no matter what, you must cut your expenses.

No. The allocations start the day you implement Profit First, with your very next deposit. Start by fully funding the expenses you currently have and give yourself time to cut your expenses. You can start by putting aside just 1% into a profit account while you figure it all out and slowly decrease the money you spend on Operating Expenses.

The only way to pay off debt (which is simply past expenses that you haven’t paid for yet) is to be profitable. You must make more money than you are currently spending in order to have current profits. You then use those profits to pay off the debt.

The sooner you start with Profit First, the sooner you will master financial discipline and force your business to run efficiently. No matter how new or established your business is, you should not wait to implement Profit First.

If your business is not profitable, you need to implement Profit First right away! Implementing Profit First forces profitability rather than waiting for it. Start with low allocation percentages - like 1% to Profit and Tax - but don't wait to get started!

The Tax account is intended to pay corporate taxes due on the business' profits AND the personal taxes of the business owner(s), even if the business owner has taxes withheld from their payroll. 15% of Real Revenue is typically enough to cover these taxes, but some © 2015 Profit First Professionals, LLC businesses with low operating expenses and high profits may have to allocate more than 15%

That is the most damaging myth of money management. Running up expenses to reduce taxes is the same as spending $10 to save $3. It is very damaging to the business. The goal is to run the business as profitably as possible (that is the only way to achieve financial freedom.) You should work closely with a Profit First Professional to additionally reduce your tax liabilities as much as you can.

Yes. This is explained in more detail in "The Profit FIrst Lifestyle" section of Profit First, but the premise is the same. Set up multiple bank accounts: Income (for deposits only,) Vault (savings account to cover the unexpected,) Recurring Payments (for recurring fixed, varying, and short-term bills,) Day to Day (for groceries, school supplies, etc.,) and Debt Destroyer (all money remaining after allocation to the previous four accounts goes into this account.) Then, determine your allocation percentages and your allocation schedule. Most importantly, STICK WITH IT, even when it gets hard