Profit First: Do You Really Need All of These Bank Accounts?

Profit First: Do You Really Need All of These Bank Accounts?
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Today we are doing "Profit First Friday" with another frequently asked Profit First question: Do I really need all of these bank accounts? Can't I just do it in a spreadsheet?
We've also experienced people running into pushback from their bookkeeper or accountant so we talk about how you should handle someone who doesn't want you using the Profit First cash flow management system.
Profit First Book Summary | Cash Flow Management Strategy for Business
• Profit First Book Summ...
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[@SafeFirm]

I am an accountant and I have used something similar for many years, I just called the accounts different names. My banker, one day, asked me,...why do you have so many accounts? almost a bit upset, but I told her,..I am an organized person and I like to keep things separate for my peace of mind. It is amazing how much time I save every other Monday when I process everything. But the feeling of PEACE is where the treasure is. I can focus on my projects, The FREEDOM I feel from the order in my finances is something I will always be grateful to God for. It was well worth the time it took to set it up years ago. My son is doing the same, so imagine that! Please keep doing what you are doing. I hope you never get tired.

[@kstevenson3504]

SUPER THANKS FOR THESE VIDEOS AND SUPER THANKS FOR TAKING THE TIME TO ANSWER OUR QUESTIONS!!!

[@kstevenson3504]

Can you or should you automate the transfers to the other accounts? Why or why not?

[@chaseharris9095]

I’d be interested in a bookkeeper for my new micro gym. Just read Profit First and it was enlightening!

[@MatterhornBusinessDevelopment]

Great! Congratulations on your new business. As far as bookkeeping contact our friends at Worry Free Bookkeeping. www.worryfreebookkeeping.com

[@nicoleayers9742]

love all the account ideas! But what % of your income to you allocate to each of the other 5 accounts?

[@MatterhornBusinessDevelopment]

These percentages are in the Profit First book and will depend on your current revenue range.

[@DialloStevens]

Why not take the profit as a draw to personal immediately, rather than quarterly? Thanks for your insights👍👍

[@MatterhornBusinessDevelopment]

Another purpose of the Profit account is to build a reserve. At the end of the quarter you only take half. The other half is left as a reserve. If you were to take the profit amount immediately, you wouldn’t build up that reserve. Plus, it’s much more fun to get a nice big bonus in my opinion 😜

[@markstory8619]

Part of this process is psychological and is designed to get that emotional boost. We like to think that we are not affected by this but in reality we all are impacted by this psychology.

[@adrianconnolly8568]

I know your criticizing CPA's or accountants in general, but you don''t really need more than two to three bank accounts of the business one for fixed expenses like Loans, wages, power, and other essentials, One for taxes, super. the amount of pay for the employees, an director should go to their personal account the rest is for materials an assets, like shares into other companies to use as a reserve for plant an equipment an down times.

[@MatterhornBusinessDevelopment]

We actually love accountants! They are super important for every business owner to have! These bank accounts we are talking about are specifically from the Profit First system, which is the system we are certified in and use with great success with our clients. Definitely do whatever works for you though!

[@pcfradkin]

Is there a product that might be able to help with this? Between kids and work I just don’t see myself having the time to set this up on my own :/

[@MatterhornBusinessDevelopment]

It will take some work to set up in the beginning, but once you are doing it consistently, it really only takes a few minutes to do the transfers. I suggest calling your bank ahead of time to get the accounts set up for you. That way you just walk in and sign the paperwork instead of sitting there for an hour while they set it up. Otherwise we do have a whole module on Profit First in our Adventure to Profit program. We have special spreadsheets and checklists to help you take it one step at a time and get it implemented.

[@soniacampbell3063]

Hi, what about for Canadian CPAs?

[@MatterhornBusinessDevelopment]

This system works in Canada as well. You would need a different account/percentages for GST though.