Pay Yourself First In Business (Profit First Accounting)

If you're a small have a small business, are self-employed, or hustle on the side, you need a business budget.

About a year and a half ago, my friend Desirae​ from HalfBanked told me about a book called Profit First by Mike Michalowicz. It's a budgeting method, but for your business.

I immediately ordered it, devoured it in a couple of days, and implemented the system. And I must say... It's been a HUGE game changer for us.

Since using this method we've:

+ Increased our business profit significantly
+ Felt less stress because we built a business emergency fund
+ Paid ourselves a consistent monthly salary that we can count on
+ Had plenty of money ready when taxes were due

The basic premise of the book is based on changing the equation for how we calculation profit. Instead of Sales - Expenses = Profit. Mike Michalowicz turns this equation around to where Sales - Profit = Expenses.

When you turn the equation around, you force your business to set aside money for profit first (hence the name.) Then you have to run your business on what's leftover.

I'm a massive fan of the Profit First and the method, and today I'm sharing that method with you. If you run your own business or honestly, have any sort of irregular income, this method will transform the way you budget.

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PS: If you have an Amazon Alexa, I just launched a brand new daily flash briefing called 30 Second Money. It would mean the world to me if you checked it out in your Alexa app.

[webby]

honestly this is so useful man. thank you

[michellejames]

The best recap I’ve seen. I appreciated the top level description complete with applicable examples.

[ajw]

Your videos have changed my financial life forever. I feel so inspired and capable. You are doing great work in this world!!

[nucleartide]

This is the only video I found that explained Profit First in a way that makes sense. Thanks so much Nick!

[MinnieOnCam]

I love this video !!, I don't think I need to read the book. This explains soo much, thank you for making this video.

[martinreceveau]

Can't wait to see that Profit first + YNAB routine

[mariepoulin]

Exactly what I was looking for, thank you!! Great video!

[alyselaurel]

This was eye opening and exactly what I needed. I didn't have fully formulated questions, just struggles and uneasy feelings and this video was the answer. I started using YNAB Oct2020 and finally found a system to get me out of my spreadsheets. Can't wait to combine these ideas. Thank you!

[Johnsoncrna]

This is awesome! Two of my favorite systems!

[nicelookash]

Youre an amazing teacher. I was confused about the taps and caps but you cleared it up

[TruFinancials]

I just started listening to Profit First...haha Amazing breakdown my friend! And congratulations on 10k!!!

[abbyreichner]

This is such a great video!! It couldn't have come at a better time. I just became self-employed and this video is a life-saver. Thank you so much for putting this out there.

[amyreilly]

Awesome video! Super helpful for my husband & I who are starting our own business. Appreciate the time you spent!

[michaelm]

You are such a great teacher, thank you for putting this together for everyone.

[MissKalisha]

Hello Nick, awesome video. Thanks for further breaking down profit first system. Is the Owners compensation accounting necessary when you have multiple locations for your business?

[jodieglowz]

Best tutorial I’ve found!! New subscriber here

[carolynmadvig]

Very interesting concept - another one, like YNAB, that gives self-employed folks like my husband and I a "why" that actually makes sense! Am looking forward to the video that combines Profit First and YNAB. Thanks for sharing!

[colleenbenas]

Awesome. Video. Thank you so much. I just finished profit first and I can't wait to get started.

[TheElectrican]

Damn bro thats the clearest ive heard it explained! Thank you and god bless man!

[swetha]

Thankyou, that was a lot of information.. but broke down nicely