Running a business doesn’t mean you’re bringing home the money.
If you’ve ever asked yourself, “Where did all the money go?”—you’re not alone.
Many small business owners are generating revenue, but still struggling to pay themselves, cover taxes, or build savings. The good news? There’s a solution—and it starts by flipping how you think about profit.
Welcome to the Profit First system by Mike Michalowicz.
What Is Profit First?
The traditional accounting formula says:
Sales – Expenses = Profit
But in practice, this often means profit is whatever scraps are left over—if any. That’s where Profit First changes everything. It flips the equation:
Sales – Profit = Expenses
It’s a small shift that creates huge results. Instead of hoping there’s something left for you at the end of the month, you take your profit first—then run your business on what’s left.
Why So Many Business Owners Feel Broke
Even with strong sales, most entrepreneurs operate on what’s called bank balance accounting. You check your bank account, see what’s there, and spend based on that number. This leads to:
- Skipped paychecks
- No savings for taxes
- High stress during lean months
- The feeling of being on a financial hamster wheel
Profit First brings clarity and peace of mind by giving your money a job before it even hits your main account.
How the Profit First System Works
You’ll set up 5 essential bank accounts to manage your business cash flow:
- Income – All revenue flows into this account
- Profit – A small percentage is set aside just for profit
- Owner’s Pay – So you actually get paid consistently
- Taxes – Save for what you know is coming
- Operating Expenses – What you use to run the business
Every two weeks, you allocate money from your Income Account into the other four accounts based on set percentages. For example:
- Profit: 5%
- Owner’s Pay: 50%
- Taxes: 15%
- Operating Expenses: 30%
If you received $10,000, here’s how that would look:
- $500 to Profit
- $5,000 to Owner’s Pay
- $1,500 to Taxes
- $3,000 to Operating Expenses
Now, you only look at your Operating Expenses Account to decide what you can afford to spend. This reduces overspending and creates discipline without feeling restrictive.
Real Client Success Stories
I’ve helped dozens of business owners implement Profit First—and the results speak for themselves:
✅ One client went from always owing $15,000 in taxes to saving ahead and even getting a refund.
✅ Another grew from $1,500 in savings to $30,000 in just one year.
✅ A third finally paid off all their business credit cards—for the first time in years.
How Profit First Helps With Taxes
Tax season shouldn’t be a surprise. When you set aside 15–20% of your income for taxes bi-weekly, there’s no last-minute scramble or payment panic.
As a tax strategist, I can also use your Profit First setup to help you reduce underpayment penalties and plan proactively.
Common Mistakes to Avoid
To get the most out of Profit First, don’t:
- Skip your allocations during slow months
- Try to do it all in one bank account
- Forget to adjust percentages as you grow
- Ignore setting aside money for taxes
Success comes from consistent habit change—not spreadsheets or shortcuts.
Start Small, Start Smart
Feeling overwhelmed? Don’t be.
You can start with just 1% into a Profit Account. Open a separate account and make it automatic. That small shift builds confidence and momentum.
Final Thoughts: Build a Business That Pays YOU First
Your business should serve you—not the other way around.
You work too hard to skip your own paycheck, stress at tax time, or feel broke while revenue is flowing. Profit First gives you control, clarity, and cash.
Ready to Start?
📞 Book a free Discovery Call
Let’s figure out your starting percentages and set up your accounts.
Schedule here
📚 Read the Book
Check out Profit First by Mike Michalowicz on Audible or wherever you get books.
📝Watch the full video here:
https://youtu.be/YItYew7r2ug