Nick, you and Hanna are great. I appreciate you both immensely. I've just implemented the Profit First system into both my side hustles AND my wife and I just redid our budget in order to live within our financial means so that we're not living month to money or paycheck to paycheck. You've both supercharged our budgets and I'm uber excited for what the future holds for our financial wellbeing. Production value is spot on and thanks again from the bottom of our hearts. 🙏🏻💖
Hey thanks Bradford! This means so so much to hear. Seriously, thanks for taking the time to comment, and congrats to you and your wife for working hard and getting your budgets going! I'm excited for your future.
@@mappedoutmoney np man! Just got Profit First on kindle and loving it so far. Mike's writing style is super easy and fun to read. Thanks for the suggestion (from your vidz). Do you have any suggestions for a products based business? I'm working on my product line as a mushroom cultivator and not sure how to log everything for raw materials, packaging, etc. Would all that be cost of goods?
@@mappedoutmoney I just wrote you a comment above and this def helps out. So, in this method with COGs paid first, is this like the fees where it'll be a negative number without a "goal" and you fix it prior to the PF portion?
I am so eager to share the Profit First/YNAB combo with trade contractors I know. It makes owner's draw function like the steady pay of a salary, which banks like to see when applying for loans and mortgages, yet maintains flexibility. This is a huge game changer for contractors, especially the one's who are usually scrambling to keep up with completing services, thereby neglecting the office/financial management. For context of how important this is, 75% of contractors do not budget. Imagine the boon PF+YNAB will be to them!
oh gosh THANK YOU! I have been put off of Profit First b/c of the umpteen billion accounts juggling, I did not want to open that many accounts with different banks and all that hassle. Really appreciate this simplified breakdown!
Wow, I've had a side hustle business for a few years now and have yet to pay myself anything. I have just been saving everything, paying the taxes, and not knowing what to do with the money. So I searched youtube and saw a YNAB video (whaaat my favorite budget app), and took a deep dive and set my budget up, business checking, and everything is so much more clear now.. And I finally paid myself a small compensation for the first time. Thanks!
Thanks for this info! I am setting up my new business with Profit First principles in mind in YNAB. So far I love how it is working out. I miss you having new content, what are you up to these days? I also wanted you to know I am using tons of your content on YNAB to create a custom Personal Finance course for my teenagers in their homeschooling lessons. They each have a budget in our YNAB subscription. I am determined that each child that graduates from our homeschool program has solid budgeting skills and your resources have been a big part of making that happen. I just link your videos in our Evernote program that I use to create custom lesson plans along with to-do tasks for them like reconciling their budget and or encouraging them to set a new goal in their budget etc. Hopefully, your year is starting out prosperous!
Love this video! I watched it to get an idea for handling my side-hustle finances but realized that I could also apply the “funnel” categories to my personal budget to put my long-term savings goals first. Completely changed how my budget works for the better. Thank you for your clear videos!
OMG! I watched the Profit First presentation by Mike Michalowicz on the Printavo youtube channel then I watched this video and all came into place. Thank you Mike so much for this. Keep making yearly or 6 month update videos on this it's so helpful.
I'm already a YNAB user and coach, but new to Profit First and that's the same video that got me here. It's genius, especially because it makes Owner's Draw function like a salary!
Hi Nick, one year in on YNAB for both personal and business. I started YNAB based in large part on your tutorials. Just starting in on Profit First. I'm on year 12 in the business and have always been profitable, but now that my wife is a stay at home mom, and I am the sole breadwinner I figured I need to be a bit more disciplined on paying myself to keep the personal side balanced. This is all pretty timely as I was struggling with your earlier video with all the physical accounts, and with the Profit First book approach. The four "pass through" mini TBB accounts make a hell of a lot more sense. Thanks again for the content!
Awesome Tim! So pumped that this was good timing for you and helped make sense. I agree, the pass through categories make it a LOT easier to manage. Happy budgeting my friend!
Amazing! I wish I’d known about YNAB when I was trying to implement Profit First in my old business. It would have saved me a world of pain and confusion. The Profit First separate account structure didn’t work well with a regulatory requirement for me to run everything through a general account. YNAB completely solves that. It keeps all the benefit of Profit First without the complication + YNAB actually makes it so much easier to see operating expenses clearly. Mike should really talk about YNAB as an alternate option in a future revision of the book.
I'm so happy you posted this video. I was a bit discouraged a year ago with PF bc of all the physical accounts. I'm definitely going to give this simplified system with YNAB a try!! THANK YOU!
@mappedoutmoney Thank you SOO MUCH for this video. I am starting out the new year and already use multiple Profit First Accounts. So happy I can simplify this year! My question is: How do you link STRIPE? Is it a tracking account? Checking? Unlinked or Linked? Thanks so much for your help!
Mind Blown. I will have to watch this several times and get the book. Just watched your other Profit First video. This is so helpful to me as a YNAB newbie and struggling small business. I've realized I need to really up my game with my financial planning and structures. It's awesome to have someone showing the way.
Hey Nick I know this is an older video but I really appreciate your time spent to make this video easy to digest. I was able to follow along and get set up. Excited to see results. Thank you sir.
Thanks for the update Nick! I've been using Profit First for a couple years now, and just started using YNAB personally earlier this year. Looking at starting it for my business as well. One comment on "keeping things simple" vs tracking your detailed transactions in Paypal or who ever you do your merchant services with - I'd definitely track the details, because you're missing out on reporting expenses of the fees if you only report net. Bottom line is probably the same, but I'd prefer to see top line revenue - fees - sales tax if you have any - that way things are clean from the beginning - makes reporting and looking at year over year results more meaningful. Just my .02... Great job!
Yup totally agreed :) That's why I do it. You can go get those fees from your payment processor if you want and still write them off, but I personally like having them in YNAB and seeing the whole picture like you. Thanks for watching!
Great video. I’ve been using YNAB for a decade for personal and business and recently read Profit First. I was basically doing it without knowing it. But I still got some valuable information regarding what to set aside for profit and owners comp, so I’ve made some tweaks. I like your system so I’m going to use it. Appreciate all your content!
This video absolutely blew my mind lol. I work full-time as a senior video director in my day job, but on the side I freelance photo/video work. I found YNAB yesterday.... you today. Finally I can take active steps of getting ahead. Thank you bro.
@@mappedoutmoney Thanks so much bro! Now I'm patiently waiting for the Money Mastery Class to possibly open back up =) Subbed and going to continue consuming your content.
@@ColeDeRuse haha, sounds good man! We just kicked off our latest class for the new year (we run one about once/quarter). So we'll run this class this month and our next class will likely be March/April. Also, checked out your music videos. You're legit dude. Really enjoyed your flow.
@@mappedoutmoney 6 months later - I’m a month ahead in my business account in ynab along with an emergency savings of $1,200. In our personal budget, we are ahead two months in ynab, and have 10k in emergency savings plus real financial peace. Thanks for all the help man it’s been amazing
This is a super upgrade to your last Profit First video....thank you soooo much. I do still have the same question I posted on the last video which is: My business is a LLC/S-Corp so I use a payroll processor. Do you have any suggestions on how to capture payroll expenses, taxes, etc. when a third party software does it for you? I hope this question is clear...I use Gusto, but I don't know how to set up CAPS & TAPS when it's kinda doing it for me. Any advice would be helpful!
@@terdbrain484 Nope....not yet...I don't know how to boost this comment ...can we 'at mention' people on this thing? Hey, Nick True - MappedOutMoney we need answers...if you have them, please, kind sir!
An incredible amount of gold right here, thank you sir! One question: my beloved and I are about to join our finances (yay life partners 🥰). We each have a business we run and i'm just wondering how you might set this all up using YNAB? I'm thinking one shared budget for our personal life, then a business budget for each of the businesses. Is that how you'd work it? Also, would that mean having one shared bank account for us as a couple, plus two business bank accounts, one for each business? Sorry if this is all basic stuff, i am very late the the 'being a responsible adult' about money, business, etc! Thanks for helping me move forward with this. All the best, your friendly neighbourhood troubadour from South Africa 😋
awesome video! I had just set up the profit first in YNAB for my business. But after watching your video I will tweak it a bit so it's easier. Thank you so much.
Great video, thank you! So much easier this way than with lots of actual bank accounts:-) I’m wondering what you’d recommend in cases where there’s not enough income to meet the goals? Would that require adjusting the CAPs? Or wam-ing in YNAB across categories?
Nick, I love your videos! I wondered if you would consider doing a walk through of how you can use your YNAB set up and reporting features in such a way that it would be ready to hand to an accountant. I use YNAB and Xero (because it's designed for this purpose) and I'd love to get rid of Xero. Thanks!
This is really great! I love how much more simple it is. One question I have is that in Canada we have to file sales tax quarterly and get credits based on sales taxes we have paid on business expenses. What would the best way to track this to not have to use another system like wave or quickbooks?
OMG! Thank you so much for this video. I will be watching it again as I set up my budget. Is there also a Profit First for a personal budget or do I just follow the steps from this video?
My business is small (made 8K revenue last year) and really more of a side hustle at the moment. I have some expenses but they're minor. Right now I have a category in my personal budget and use a spreadsheet to keep track of tax deductions. However, as my business grows I want to separate finances, so I'm researching the best way to do that. Because I work from home there are some things I use for both personal and business, such as internet, printer ink, etc. In my budget I treat these as personal, but then add them (or portions of them, where applicable) to the spreadsheet to deduct at tax time. How do you handle these kinds of things when you have a separate business budget?
Thank you so much this video has been incredible helpful and I am working on setting up our Profit First system into YNAB. One question - where can I find the video for how to add the "Goals" column in my YNAB?
Hey Elizabeth - that's a feature in the "toolkit for ynab" and you can find my video on that. But I actually don't use it anymore, because YNAB now has this built in natively. You can click the gray bars right above the "available" column and it will expand to show you the targets.
Loving these videos. I have been unorganized with my money for far too long. This video just relieved so much anxiety I had about confronting finances. I was wondering if you have one YNAB account for both personal & business if you are sharing an account with your partner/spouse?
Hi Nick, great video! Really helpful. 1. A question about COGS, for a service business, would you put referral percentages, subcontracting (that is charged to the client) and commissions (%) as COGS or Expenses? 2. Also how would you handle taxes? Here in Canada, we have 2 sales taxes that are charged to clients and tracked throughout the year, any sales taxes expenses that are paid are then deducted and the balance is paid out to the government quarterly or yearly. Where would that fit in PF method? Thanks!
Thank you! I keep returning to this video and getting more gems. Question-- after you pay yourself your quarterly distribution and move 50% of your profit (from your profit category in biz savings) to your quarterly distribution category (within your owners comp category) wouldn't you want to move the other half out of profit and into a business savings account/category? Otherwise when Q2 rolls around, you are pulling additional money from Q1.
I love your YNAB videos, they have helped me a lot. I'm struggling though to the point I don't think I will Stay with YNAB after the free trial as I get paid fortnightly (every 2 weeks on the same day of the week) and I also have some bills on the same timeline as well. This is made even harder on the couple of times a year when I would get paid and have these bill 3 times in a month due to a 5 week month. I'm a visual person and need to see fortnightly bills paid each fortnightly pay period and not combine them monthly. Please do a video on being paid each fortnight with some bills due each pay such as Life Insurance
Can you share your thinking behind the 'tools' vs 'services' categories? Does that categorization help with decision-making or when running reports? Are services only external people/companies you hire and everything else is a tool? I am unsure where I would put things like annual business filing fees or professional organization membership. Thank you!
Great video! Been using profit first myself for a couple years. Very simple and effective system. Do you use QuickBooks for anything or just invoice through your processor and record in YNAB?
YNAB only. I Invoice through the payment processor and track time through Timular, and use Gusto to run payroll. So no need for quickbooks. I can use YNAB for all the bookkeeping.
Jennifer knows more about YNAB than I do so I’ll get her to watch this. Are there any drawbacks or major differences in this system vs QuickBooks? Currently we are having to do a lot of double entry to get everything recorded in QuickBooks so we have accurate reports.
@@liers99 The biggest downside is that it doesn't have pre-built in reporting functions for revenue breakdown and tax prep at the end of the year. It has all the data, just not good reports for taxes on the income side (spending reports are great). So I just export the data to a google spreadsheet I built for myself to get the data I want. Other than that, no need for Quickbooks in my opinion. The other thing that you may have that I don't have much of is depreciation on assets. From that perspective, you'd need to just track depreciation elsewhere. Here's an article of how YNAB the company uses YNAB and ditched Quickbooks: www.youneedabudget.com/goodbye-quickbooks-you-need-a-separate-business-budget/
@@mappedoutmoney I guess it only makes sense that YNAB uses YNAB. I’d be a little concerned if they didn’t. I like his statement to the effect of , let your accountant do the accountanty things and don’t let his 2 hrs of work on your taxes dictate your work flows.
@@liers99 yup. Exactly. Ynab helps you budget the business. I have some clients that run ynab and they still have an accountant keep the quick books for taxes. But they still find ynab worth it for the tax flow planning.
Really great stuff Nick! Thanks for taking the time to record such a thorough tutorial. My biggest hang-up (and holdup) with PF has been the multiple accounts, so this is a great solution! I've been with YNAB since the spreadsheet days, so I'm quite familiar with it, just need to get more up to speed on PF. We have log cabin rentals, so we literally have different amounts flowing in from our merchant account to the checking every day. Our merchant account has an "interchange + zero" pricing model, so the fees we pay can also vary day to day depending on which credit card folks use. How would you recommend dealing with those fees from a COGS perspective? We do get a merchant statement each month which breaks it down, so I'm thinking maybe we only allocate those numbers monthly...?? Another question would be... Do you have to deal with sales tax or any other types of taxes on your products/services? We have to collect sales tax on retail up-sale items (gift baskets, souvenirs, etc) and a local tourism tax on the rentals, which then gets remitted monthly to the appropriate authorities. Those are set percentages, and should be a little easier to deal with, but would those be handled similar to other COGS?
Nick I'm trying to implement your method for using a payment processor (Square). I think i start with the split transaction the Square account to process the income but then I'm left with the tbb balance in my square account instead of in my bank account. What am I missing?
Hey Nick, hope all is well and I just came across your youtube page. I've binge watched quite a few videos and stoked on your methods and how you teach them. I am currently making a small business which I thought I had a year to get going but due to circumstances, I am full steam ahead. My question to you is, while very new to YNAB, I set up a basic budget like how you have it in this video (PF simplified) and since I am just starting out, things are very wonky. I had savings that I am funding the business with and trying to wrap my brain around how to functionally set it all up. For me, COGs would be a huge part of my business (wood and metal shop building and selling physical goods). I have the COGs set up like you and you stated to pay these first before you do the PF portion. Would these be an accumulation of all the physical things in the product and shipping of product? I feel like these would be accounted for in the budget "Other" or "Tools" in my business model. So many gears turning right now that even simple things are a huge task. Thanks for everything you shared so far!
I've been using profit first for personal use. But not with the simplified version, but the older more complex one. Even though it is more work, i think a benefit of having separate "physical" accounts, it makes you better think what you are doing when you're spending. Make you aware of several things, also makes you work within a "relative scarcity". For example, if you have 1 checking account you might see a big number if you're not in the habit of using ynab consistently. But if you have separate accounts, you can't simply spend what is not there, and you can ask yourself: Is this expenditure that i'm going to incur into really an opex(in personal finance, maybe something that if you don't pay you can't sustain your day to day life or something similar)? Or is it something else? I also combine this with the wish list/ wish farm idea you can find in ynab's blog. That way i have allocations within my owner's comp for gifts, take out, or other wishes, and the same foes for quaterly profit distributions but mainly to farm wishes! I'm even thinking of planning my vacations based on these profit distribution dates 🤣👍🏻 Good luck in your profit first + ynab journey
On the quarterly Profit Savings Distribution, are you moving the other half to some other account, or leaving it in there? If you're leaving it in there, is the next quarter's distribution going to be half of the account balance (which presumably still contains the previous quarter's lingering half) or are you doing the math and only distributing half of that quarter's profit?
I am so happy you did this one. I was worried about having so many accounts. I do have a question: I recently started a home daycare (dream) and the OPEX is basically the job. Do I just avoid paying myself and make OPEX the largest percentage? I am getting better at managing my personal finances and do not want to even start off messing up my business finances. I have payments just sitting cause I'm afraid to move it cause I know the other me (not that great at managing income). I hope that makes sense. If you don't answer specific questions, could you do a video on OPEX heavy home based businesses and allocating percentages?
Hey Nick, do you have any videos that discuss how to include gift cards in your budget on YNAB? I've watch a bunch but haven't seen anything on that. I've also done some of my own research on the matter, but I'd love to see what you come up with!
Great video and have been implementing in my small business. This really makes me feel like I am on the right track with my business and personal finances. I have one question, though. I have really low operating expenses so I believe I will adjust my percentages for that now that I've been doing it for a couple of months. Right now, I'm budgeting my operating expenses into the next month and beyond when I have the money. At what point do I stop budgeting into the future and start doing something else with the money?
Thank you so much! I have 2 businesses I run from my home (childcare and Notary). Can I put both business on ONE budget sheet with Payees being Child Care and Notary so as not to have so many budget sheets? I have one for our personal household expenses. I've been a YNAB user for years. It's been crucial in helping us get out of debt. We have a 2 month buffer--something we've NEVER had!
very good info! do you just use the profit funding for emergency fund or do you create a separate budget and split the profit there for emergency fund?
Hello -- Thank you for putting these resources together, thank you! I have question about COGS. Does that refer to printing costs? For example, I sell decks of cards. When I sell one, should I be taking the cost of having produced that out of the sale price like I would fees from PayPal? And what distinction do I need to make between sales tax TAP and business tax TAP?
Hey Nick, just started listening to the Profit First audiobook and I wanted to implement it into my freelancing business, but we've been using YNAB for a few years now personally and I knew there had to be a way of doing Profit First with YNAB and then I found your video - so thank you! I'm wondering what you think about retirement savings for me. Is that something I should be saving for out of my business account, or saving for out of my personal account from the payment I make to myself? I'm trying to save 20% of my business revenue in my SEP-IRA account each month, but I've been doing that out of what I pay myself each month. But now I'm wondering if should just do that from my business account as part of my "Owner's Comp". Maybe a separate category for Retirement Savings that's a part of my monthly Owner's Comp? Do you have a retirement savings account in your business YNAB?
Would you recommend starting a new budget from scratch if you already have a budget but it isn’t as “clean” definitely realized I need to change some YNAB habits haha
Hi thank you so much for all your great videos! I’ve been using YNAB now for 2 years and it’s truly changed our lives. I’m starting a real estate business and would love to implement the profit first method. How would you suggest implementing this system for a commission based business? Would you use your income and use your CAP percentages and budget only for that month? Trying to figure out how that would be since In a commission based business you can have a really great month and Have income And then no income the next month. Currently since I just started and I’m not making any money yet I have a category in my personal budget named business until I generate income and then will budget it out in a separate business budget account
A question about owners comp--if in our personal life we have a lot of CC debt, wouldn't it make the most sense to transfer excess money made to owners comp for the current month...and NOT bank it for the next month? If you earn so much you could avoid nasty CC fees, it doesn't make sense to pay yourself in the future 2-3 months when you need money now...right?
Nick, I'm using the Square payment processor and was delighted to find your method! I think I'm missing something because when I do the split transaction from the Square account the tbb amount stays in the Square account. When I reconcile my accounts this won't add up. What did I miss?
@@mappedoutmoney Would you consider doing a video where you show how to use YNAB to prepare for tax time? Like how you manage the excel export and prepare a Schedule C? I'm currently running Profit First out of YNAB but I'm also still using Xero and I'd love to get rid of it.
Nick True, When you pay your taxes, which category u use for this purpose ? Do you just take it from Biz Savings->Taxes or you treat it differently ? Thank you.
Hi Nick, I complete new to YNAB and had imported my spending transaction to YNAB (over the past year) to the YNAB account that I just created today because I want to see a report how what I have spending over the past year. Do I just leave the budget amount emty for the past month and do it for this month or it's better to just do it from scratch and jsut start the accounts with the current starting balance
@@electroturn1025 So when you buy inventory, that money leaves your bank and should be categorized as "cost of goods" or "cost of goods sold" no need to use both of them. Then when you sell an item and make money, that inflow comes into your bank and should go into "ready to assign" Hope that helps!
For Side Hustles do you recommend setting up a separate Profit First Budget in YNAB? For example, I am bringing in money from avenues like DoorDash, an MLM, Mercari, and eBay where I am setting aside money for taxes since they send a 1099/W-9 and pay for expenses like gas and supplies. Since our debt has been paid off, the money I am earning for this is building our savings and goals for opening a photography business. After watching this series on your channel, I am wondering if Profit First and setting it up in YNAB applies here?
I honestly would not. I think that's too cumbersome for Side hustle money. Instead, just put all that into your main account and use the payees to show the income streams. Example: When you get paid from DoorDash, the category should be "To Be Budgeted" and the payee should be "DoorDash" Then when you go to the income v expense report you can see your income breakdowns. But no, I don't think you separate full-blown budget for side-hustles. Just make a category for your photo business savings and hold the money there. But once you start that photography business, then you will want to have a separate budget for that in my opinion. Ultimately, it's personal preference, but that's what I would do.
@@mappedoutmoney That makes complete sense. I agree it is an absolute preference. It seems extra to have a budget for side hustles. Plus it feels like I am barely bringing in any money when I sort it all out. Thank you so much for your advice.
okay, I'm on step 10; isn't there a way to just allocate the percentage from the revenue just like the profit first system into different accounts instead of just coming up with a number that you wanna pay yourself and then figuring out if your revenue can even allow that? setting up the percentage off the overall revenue would be way more doable than coming up with a random amount desired for owners comp in my opinion....?
Where would you categorize physical media such as DVDs and USB sticks for content delivery ? in general equipment , or it's own category? or does that fall under cost of goods?
For me, I get that stuff so irregularly that I would put it all under "general equipment" Now, if it's a core part of your business and something you're doing a lot of, I would create a specific category for "Phsyical Media" and put it there. I also do this for large upgrades. For example, a couple years ago I spent $1200+ upgrading all my camera and microphone equipment. So I created a specific category to save for that equipment and purchase it when I was ready. I don't personally use USB sticks that often, so it'd be a minor expense and I'd use general equipment. But to me, this isn't cost of goods. This is definitely an operating expense. Let me know if that makes sense!
@@mappedoutmoney thanks for the reply! , this makes the profit first method in YNAB seem so much less daunting , your previous video , I saw all the accounts and physical moving of money , and decide I would wait a while to try it out , with your much simplified version , i'm going to try to put it to use.
@@MyBudgetLife Awesome. Yes, I totally know the previous video was ridiculous. haha, so glad this feels more approachable. Let me know how it goes and reach out if there's anything I can do to help!
For someone just starting a business and using personal money to pay for start up costs before have business checking and credit cards set up, how do we record those transactions? You mentioned setting up a Line of Credit if we intend to continue to use personal money. I'm trying to figure out how to show the expense for tracking purposes and show that it's been paid via personal money and I'd like to have it paid back at some point. But I'm not sure how to set it up in YNAB since the LOC is on budget. Thanks.
Hey Tiffany, I would reccommend not doing a separate budget until you do have a real life separate business checking/savings/CC account. If you're putting business expenses on a personal CC and then paying it off with a personal Checking, I would just include a "business" group inside of your normal YNAB budget. Then once you're ready to open a business checking account and have a separate card for business purchases, I would move a chunk of money from personal --> to the business and run the business off of that. Lastly, once you do that, you can add a "liability" into your business budget in YNAB to track the amount of money you have used on the personal side and make sure you pay yourself back. Let me know if that makes sense!
@@mappedoutmoney I also had this question. This is great! Thank you for replying to Tiffany's question. What would you suggest if the start up money was actually not dipped into? Would you still create a liability or just incrementally transfer the unused funds back to the personal account after the Profit Savings have accrued a comfortable cushion? Blessings, G
Thank you for this! How did you manage to add the credit card emoji to your credit card payments category? It seems to be locked and I am unable to edit the name.
@@mappedoutmoney Thanks for the reply! I managed to change the account names of my credit cards just fine, as well as all other categories in my main budget area. The credit card payment category itself though won't let me edit the name. When I right click on it my only option is to hide the category.
@@MarkHimley Hey Mark, yeah, the CC categories are the one categories you can't edit. In order to edit the CC payment category, you have to edit the CC account name. If you right-click on the account name, you can change the CC payment category by changing the name. If you'd like the CC emoji for the whole group, the only way I know to do that is a toolkit setting. It's a browser extension that can do this: www.toolkitforynab.com/
@@mappedoutmoney Ah yes thank you!! Just got the toolkit and that is exactly what I was looking for - to add the cc emoji to the credit card payments category. Thank you very much!!
You may have answered this already but wondering what if i i want to use profit first principles for personal accounts in addition to business accounts. I have personal income along with business. I dont do w2 to pay myself in my business. I take draws. My business is a staffing w2 company with employees and payroll. The service is staffing and equipment rentals that i outsource with a 20% service fee. My personal accounts have the usual but with investing account for real estate savings
Thank you!! A question Ive been wondering. We are doing this as a side hustle, so hubby and I have full time jobs. Do we still take a compensation, just make it less of a percentage??
I got a question regarding quarterly profit distribution. In reality, technically the profit distribution is paid in the form of a dividend (when LLC is concerned)? If so a dividend is taxed both on the company site and on private site. Does it mean that i pay dividend to myself in the amount of 0,5x profit (for given quarter) and all divident related taxes are already included on my profit first taxes account ?
How would you handle sales tax? I'm assuming since sales tax is not my money I am taking it out before any calculations for owners comp, expense and what not expect for after income tax is calculated.
I handle it in COGS (Cost of goods) So you're correct, I take it out before running my percentage routines against the To Be Budgeted. Budget for it immediately, and then run your percentages against what's left over.
For business? OPEX - probably have a separate group entirely to track the "office" and call it Office and then put rent, utilities and other office expenses in that group.
Hey Michael! That's a good question. What I would do is bring the money in as "To Be Budgeted" and use the "Payee" to denote that it was the EIDL or the PPP for example. Then I would create a specific category (inside my profit first groups) just for that EIDL/PPP. And put all the money there. I would NOT run my profit first routine against this money because if you're trying to get that loan forgiven, it has to be spent in very specific ways. So I would hold that money in that specific category, and then move it from that category to other expenses as needed based on what is forgivable. Hope that helps!
Download the resources here: mappedoutmoney.com/ynabpf
Quick Jumps:
0:00 - Intro
0:35 - Before You Start
1:52 - Setup Checklist
2:15 - Step 1
2:52 - Steps 2, 3, and 4
3:20 - Step 5
4:18 - Step 6
10:47 - Step 7
12:05 - Step 8
13:05 - Step 9
14:10 - Step 10
16:20 - Step 11
16:40 - Step 12
17:20 - Daily Routine
21:40 - Profit First Routine
35:25 - Quarterly Routine
38:00 - Download The Resources
Nick, you and Hanna are great. I appreciate you both immensely. I've just implemented the Profit First system into both my side hustles AND my wife and I just redid our budget in order to live within our financial means so that we're not living month to money or paycheck to paycheck. You've both supercharged our budgets and I'm uber excited for what the future holds for our financial wellbeing. Production value is spot on and thanks again from the bottom of our hearts. 🙏🏻💖
Hey thanks Bradford! This means so so much to hear.
Seriously, thanks for taking the time to comment, and congrats to you and your wife for working hard and getting your budgets going! I'm excited for your future.
@@mappedoutmoney np man! Just got Profit First on kindle and loving it so far. Mike's writing style is super easy and fun to read. Thanks for the suggestion (from your vidz). Do you have any suggestions for a products based business? I'm working on my product line as a mushroom cultivator and not sure how to log everything for raw materials, packaging, etc. Would all that be cost of goods?
@@bradford.champlin Yes! You're spot on. That would all be cost of goods and be taken before you run your profit first routine.
@@mappedoutmoney I just wrote you a comment above and this def helps out. So, in this method with COGs paid first, is this like the fees where it'll be a negative number without a "goal" and you fix it prior to the PF portion?
I am so eager to share the Profit First/YNAB combo with trade contractors I know. It makes owner's draw function like the steady pay of a salary, which banks like to see when applying for loans and mortgages, yet maintains flexibility. This is a huge game changer for contractors, especially the one's who are usually scrambling to keep up with completing services, thereby neglecting the office/financial management. For context of how important this is, 75% of contractors do not budget. Imagine the boon PF+YNAB will be to them!
oh gosh THANK YOU! I have been put off of Profit First b/c of the umpteen billion accounts juggling, I did not want to open that many accounts with different banks and all that hassle. Really appreciate this simplified breakdown!
No problem KimBoo! So glad this was helpful for you :)
Reach out if you ever need anything!
Wow, I've had a side hustle business for a few years now and have yet to pay myself anything. I have just been saving everything, paying the taxes, and not knowing what to do with the money. So I searched youtube and saw a YNAB video (whaaat my favorite budget app), and took a deep dive and set my budget up, business checking, and everything is so much more clear now.. And I finally paid myself a small compensation for the first time. Thanks!
Thanks for this info! I am setting up my new business with Profit First principles in mind in YNAB. So far I love how it is working out. I miss you having new content, what are you up to these days? I also wanted you to know I am using tons of your content on YNAB to create a custom Personal Finance course for my teenagers in their homeschooling lessons. They each have a budget in our YNAB subscription. I am determined that each child that graduates from our homeschool program has solid budgeting skills and your resources have been a big part of making that happen. I just link your videos in our Evernote program that I use to create custom lesson plans along with to-do tasks for them like reconciling their budget and or encouraging them to set a new goal in their budget etc. Hopefully, your year is starting out prosperous!
Love this video! I watched it to get an idea for handling my side-hustle finances but realized that I could also apply the “funnel” categories to my personal budget to put my long-term savings goals first. Completely changed how my budget works for the better. Thank you for your clear videos!
OMG! I watched the Profit First presentation by Mike Michalowicz on the Printavo youtube channel then I watched this video and all came into place. Thank you Mike so much for this. Keep making yearly or 6 month update videos on this it's so helpful.
I'm already a YNAB user and coach, but new to Profit First and that's the same video that got me here. It's genius, especially because it makes Owner's Draw function like a salary!
So glad I don’t have to open the 5 +2 accounts Profit First wanted me to! Thanks for the lesson. I’ll be watching it again and again, I’m sure!
Hi Nick, one year in on YNAB for both personal and business. I started YNAB based in large part on your tutorials. Just starting in on Profit First. I'm on year 12 in the business and have always been profitable, but now that my wife is a stay at home mom, and I am the sole breadwinner I figured I need to be a bit more disciplined on paying myself to keep the personal side balanced. This is all pretty timely as I was struggling with your earlier video with all the physical accounts, and with the Profit First book approach. The four "pass through" mini TBB accounts make a hell of a lot more sense. Thanks again for the content!
Awesome Tim! So pumped that this was good timing for you and helped make sense. I agree, the pass through categories make it a LOT easier to manage.
Happy budgeting my friend!
This is just what I was looking for. I just learned about Profit First and Ynab User. Love this. I will implement it starting today.
Thanks Dennis, glad to hear that!
Nick, you are the best. This made Profit First crystal clear, and I will start using YNAB for my freelance business.
Amazing! I wish I’d known about YNAB when I was trying to implement Profit First in my old business. It would have saved me a world of pain and confusion. The Profit First separate account structure didn’t work well with a regulatory requirement for me to run everything through a general account. YNAB completely solves that. It keeps all the benefit of Profit First without the complication + YNAB actually makes it so much easier to see operating expenses clearly. Mike should really talk about YNAB as an alternate option in a future revision of the book.
I'm so happy you posted this video. I was a bit discouraged a year ago with PF bc of all the physical accounts. I'm definitely going to give this simplified system with YNAB a try!! THANK YOU!
@mappedoutmoney Thank you SOO MUCH for this video. I am starting out the new year and already use multiple Profit First Accounts. So happy I can simplify this year! My question is: How do you link STRIPE? Is it a tracking account? Checking? Unlinked or Linked? Thanks so much for your help!
Mind Blown. I will have to watch this several times and get the book. Just watched your other Profit First video. This is so helpful to me as a YNAB newbie and struggling small business. I've realized I need to really up my game with my financial planning and structures. It's awesome to have someone showing the way.
Hey Nick I know this is an older video but I really appreciate your time spent to make this video easy to digest. I was able to follow along and get set up. Excited to see results. Thank you sir.
As usual, this was so detailed and organized, super easy to follow. Thank you for this video!
Thanks for the update Nick! I've been using Profit First for a couple years now, and just started using YNAB personally earlier this year. Looking at starting it for my business as well. One comment on "keeping things simple" vs tracking your detailed transactions in Paypal or who ever you do your merchant services with - I'd definitely track the details, because you're missing out on reporting expenses of the fees if you only report net. Bottom line is probably the same, but I'd prefer to see top line revenue - fees - sales tax if you have any - that way things are clean from the beginning - makes reporting and looking at year over year results more meaningful. Just my .02... Great job!
Yup totally agreed :)
That's why I do it.
You can go get those fees from your payment processor if you want and still write them off, but I personally like having them in YNAB and seeing the whole picture like you.
Thanks for watching!
Exactly what I needed. Thank you Nick!
Awesome sharing. Have been using YNAB for personal use but not tracking for my small business. Will follow your tips. Thank you.
Great video. I’ve been using YNAB for a decade for personal and business and recently read Profit First. I was basically doing it without knowing it. But I still got some valuable information regarding what to set aside for profit and owners comp, so I’ve made some tweaks. I like your system so I’m going to use it. Appreciate all your content!
This video absolutely blew my mind lol. I work full-time as a senior video director in my day job, but on the side I freelance photo/video work. I found YNAB yesterday.... you today. Finally I can take active steps of getting ahead. Thank you bro.
No problem Cole! So glad this video was helpful for you man. Good luck YNABing!
@@mappedoutmoney Thanks so much bro! Now I'm patiently waiting for the Money Mastery Class to possibly open back up =) Subbed and going to continue consuming your content.
@@ColeDeRuse haha, sounds good man! We just kicked off our latest class for the new year (we run one about once/quarter). So we'll run this class this month and our next class will likely be March/April.
Also, checked out your music videos. You're legit dude. Really enjoyed your flow.
@@mappedoutmoney hey thank you bro! i appreciate that for real.
@@mappedoutmoney 6 months later - I’m a month ahead in my business account in ynab along with an emergency savings of $1,200.
In our personal budget, we are ahead two months in ynab, and have 10k in emergency savings plus real financial peace. Thanks for all the help man it’s been amazing
This is a super upgrade to your last Profit First video....thank you soooo much. I do still have the same question I posted on the last video which is: My business is a LLC/S-Corp so I use a payroll processor. Do you have any suggestions on how to capture payroll expenses, taxes, etc. when a third party software does it for you? I hope this question is clear...I use Gusto, but I don't know how to set up CAPS & TAPS when it's kinda doing it for me. Any advice would be helpful!
Did you ever get an answer? Im curious too
@@terdbrain484 Nope....not yet...I don't know how to boost this comment ...can we 'at mention' people on this thing? Hey, Nick True - MappedOutMoney we need answers...if you have them, please, kind sir!
This was super helpful, thank you!
So glad it helped Sandy!
An incredible amount of gold right here, thank you sir! One question: my beloved and I are about to join our finances (yay life partners 🥰). We each have a business we run and i'm just wondering how you might set this all up using YNAB? I'm thinking one shared budget for our personal life, then a business budget for each of the businesses. Is that how you'd work it? Also, would that mean having one shared bank account for us as a couple, plus two business bank accounts, one for each business? Sorry if this is all basic stuff, i am very late the the 'being a responsible adult' about money, business, etc! Thanks for helping me move forward with this. All the best, your friendly neighbourhood troubadour from South Africa 😋
This is exactly how I would suggest to.
awesome video! I had just set up the profit first in YNAB for my business. But after watching your video I will tweak it a bit so it's easier. Thank you so much.
Dude - thanks for putting this video together Nick! Very appreciated :-)
No problem, glad that it helped!
Great video, thank you! So much easier this way than with lots of actual bank accounts:-)
I’m wondering what you’d recommend in cases where there’s not enough income to meet the goals? Would that require adjusting the CAPs? Or wam-ing in YNAB across categories?
I adjusted the same! So much better. Thanks for another great video.
Awesome Amy! Glad to hear that :)
Nick, I love your videos! I wondered if you would consider doing a walk through of how you can use your YNAB set up and reporting features in such a way that it would be ready to hand to an accountant. I use YNAB and Xero (because it's designed for this purpose) and I'd love to get rid of Xero. Thanks!
This is really great! I love how much more simple it is. One question I have is that in Canada we have to file sales tax quarterly and get credits based on sales taxes we have paid on business expenses. What would the best way to track this to not have to use another system like wave or quickbooks?
I would like to know this too!
We have to pay quarterly estimates in the US as well. Simply set a goal inside your budget that is due every quarter, and it will fund up to that.
Brilliant. Thanks for this excellent overview!
OMG! Thank you so much for this video. I will be watching it again as I set up my budget. Is there also a Profit First for a personal budget or do I just follow the steps from this video?
My business is small (made 8K revenue last year) and really more of a side hustle at the moment. I have some expenses but they're minor. Right now I have a category in my personal budget and use a spreadsheet to keep track of tax deductions. However, as my business grows I want to separate finances, so I'm researching the best way to do that. Because I work from home there are some things I use for both personal and business, such as internet, printer ink, etc. In my budget I treat these as personal, but then add them (or portions of them, where applicable) to the spreadsheet to deduct at tax time. How do you handle these kinds of things when you have a separate business budget?
Thank you so much this video has been incredible helpful and I am working on setting up our Profit First system into YNAB. One question - where can I find the video for how to add the "Goals" column in my YNAB?
Hey Elizabeth - that's a feature in the "toolkit for ynab" and you can find my video on that. But I actually don't use it anymore, because YNAB now has this built in natively. You can click the gray bars right above the "available" column and it will expand to show you the targets.
This was awesome! Thx!
So glad it helped Tomas!
This is gold! 🙏🏼
Love that book.
Thanks dude!
Loving these videos. I have been unorganized with my money for far too long. This video just relieved so much anxiety I had about confronting finances. I was wondering if you have one YNAB account for both personal & business if you are sharing an account with your partner/spouse?
Hi Nick, great video! Really helpful.
1. A question about COGS, for a service business, would you put referral percentages, subcontracting (that is charged to the client) and commissions (%) as COGS or Expenses?
2. Also how would you handle taxes? Here in Canada, we have 2 sales taxes that are charged to clients and tracked throughout the year, any sales taxes expenses that are paid are then deducted and the balance is paid out to the government quarterly or yearly. Where would that fit in PF method?
Thanks!
Thank you! I keep returning to this video and getting more gems. Question-- after you pay yourself your quarterly distribution and move 50% of your profit (from your profit category in biz savings) to your quarterly distribution category (within your owners comp category) wouldn't you want to move the other half out of profit and into a business savings account/category? Otherwise when Q2 rolls around, you are pulling additional money from Q1.
I love your YNAB videos, they have helped me a lot. I'm struggling though to the point I don't think I will Stay with YNAB after the free trial as I get paid fortnightly (every 2 weeks on the same day of the week) and I also have some bills on the same timeline as well. This is made even harder on the couple of times a year when I would get paid and have these bill 3 times in a month due to a 5 week month. I'm a visual person and need to see fortnightly bills paid each fortnightly pay period and not combine them monthly. Please do a video on being paid each fortnight with some bills due each pay such as Life Insurance
I am confused about why you have owner's compensation AND payroll. Do you use a payroll company to give you a paycheck and they pay your taxes/FICA?
Can you share your thinking behind the 'tools' vs 'services' categories? Does that categorization help with decision-making or when running reports? Are services only external people/companies you hire and everything else is a tool? I am unsure where I would put things like annual business filing fees or professional organization membership. Thank you!
Great video! Been using profit first myself for a couple years. Very simple and effective system. Do you use QuickBooks for anything or just invoice through your processor and record in YNAB?
YNAB only. I Invoice through the payment processor and track time through Timular, and use Gusto to run payroll. So no need for quickbooks. I can use YNAB for all the bookkeeping.
Jennifer knows more about YNAB than I do so I’ll get her to watch this. Are there any drawbacks or major differences in this system vs QuickBooks? Currently we are having to do a lot of double entry to get everything recorded in QuickBooks so we have accurate reports.
@@liers99 The biggest downside is that it doesn't have pre-built in reporting functions for revenue breakdown and tax prep at the end of the year. It has all the data, just not good reports for taxes on the income side (spending reports are great). So I just export the data to a google spreadsheet I built for myself to get the data I want. Other than that, no need for Quickbooks in my opinion. The other thing that you may have that I don't have much of is depreciation on assets. From that perspective, you'd need to just track depreciation elsewhere.
Here's an article of how YNAB the company uses YNAB and ditched Quickbooks: www.youneedabudget.com/goodbye-quickbooks-you-need-a-separate-business-budget/
@@mappedoutmoney I guess it only makes sense that YNAB uses YNAB. I’d be a little concerned if they didn’t. I like his statement to the effect of , let your accountant do the accountanty things and don’t let his 2 hrs of work on your taxes dictate your work flows.
@@liers99 yup. Exactly. Ynab helps you budget the business.
I have some clients that run ynab and they still have an accountant keep the quick books for taxes. But they still find ynab worth it for the tax flow planning.
Really great stuff Nick! Thanks for taking the time to record such a thorough tutorial. My biggest hang-up (and holdup) with PF has been the multiple accounts, so this is a great solution! I've been with YNAB since the spreadsheet days, so I'm quite familiar with it, just need to get more up to speed on PF. We have log cabin rentals, so we literally have different amounts flowing in from our merchant account to the checking every day. Our merchant account has an "interchange + zero" pricing model, so the fees we pay can also vary day to day depending on which credit card folks use. How would you recommend dealing with those fees from a COGS perspective? We do get a merchant statement each month which breaks it down, so I'm thinking maybe we only allocate those numbers monthly...?? Another question would be... Do you have to deal with sales tax or any other types of taxes on your products/services? We have to collect sales tax on retail up-sale items (gift baskets, souvenirs, etc) and a local tourism tax on the rentals, which then gets remitted monthly to the appropriate authorities. Those are set percentages, and should be a little easier to deal with, but would those be handled similar to other COGS?
Nick I'm trying to implement your method for using a payment processor (Square). I think i start with the split transaction the Square account to process the income but then I'm left with the tbb balance in my square account instead of in my bank account. What am I missing?
Hey Nick, hope all is well and I just came across your youtube page. I've binge watched quite a few videos and stoked on your methods and how you teach them. I am currently making a small business which I thought I had a year to get going but due to circumstances, I am full steam ahead. My question to you is, while very new to YNAB, I set up a basic budget like how you have it in this video (PF simplified) and since I am just starting out, things are very wonky. I had savings that I am funding the business with and trying to wrap my brain around how to functionally set it all up. For me, COGs would be a huge part of my business (wood and metal shop building and selling physical goods). I have the COGs set up like you and you stated to pay these first before you do the PF portion. Would these be an accumulation of all the physical things in the product and shipping of product? I feel like these would be accounted for in the budget "Other" or "Tools" in my business model. So many gears turning right now that even simple things are a huge task. Thanks for everything you shared so far!
What's the best way to do this method for personal finances? Do you have a video on using the profit first method for personal use?
I've been using profit first for personal use. But not with the simplified version, but the older more complex one. Even though it is more work, i think a benefit of having separate "physical" accounts, it makes you better think what you are doing when you're spending. Make you aware of several things, also makes you work within a "relative scarcity". For example, if you have 1 checking account you might see a big number if you're not in the habit of using ynab consistently. But if you have separate accounts, you can't simply spend what is not there, and you can ask yourself: Is this expenditure that i'm going to incur into really an opex(in personal finance, maybe something that if you don't pay you can't sustain your day to day life or something similar)? Or is it something else?
I also combine this with the wish list/ wish farm idea you can find in ynab's blog. That way i have allocations within my owner's comp for gifts, take out, or other wishes, and the same foes for quaterly profit distributions but mainly to farm wishes! I'm even thinking of planning my vacations based on these profit distribution dates 🤣👍🏻
Good luck in your profit first + ynab journey
On the quarterly Profit Savings Distribution, are you moving the other half to some other account, or leaving it in there? If you're leaving it in there, is the next quarter's distribution going to be half of the account balance (which presumably still contains the previous quarter's lingering half) or are you doing the math and only distributing half of that quarter's profit?
I am so happy you did this one. I was worried about having so many accounts. I do have a question: I recently started a home daycare (dream) and the OPEX is basically the job. Do I just avoid paying myself and make OPEX the largest percentage? I am getting better at managing my personal finances and do not want to even start off messing up my business finances. I have payments just sitting cause I'm afraid to move it cause I know the other me (not that great at managing income). I hope that makes sense. If you don't answer specific questions, could you do a video on OPEX heavy home based businesses and allocating percentages?
Hey Nick, do you have any videos that discuss how to include gift cards in your budget on YNAB? I've watch a bunch but haven't seen anything on that. I've also done some of my own research on the matter, but I'd love to see what you come up with!
I am also interested to know about handling gift cards.
Great video and have been implementing in my small business. This really makes me feel like I am on the right track with my business and personal finances. I have one question, though. I have really low operating expenses so I believe I will adjust my percentages for that now that I've been doing it for a couple of months. Right now, I'm budgeting my operating expenses into the next month and beyond when I have the money. At what point do I stop budgeting into the future and start doing something else with the money?
Thank you so much! I have 2 businesses I run from my home (childcare and Notary). Can I put both business on ONE budget sheet with Payees being Child Care and Notary so as not to have so many budget sheets? I have one for our personal household expenses. I've been a YNAB user for years. It's been crucial in helping us get out of debt. We have a 2 month buffer--something we've NEVER had!
I wouldn't; it might make things confusing between each business.
Hey Nick True, why did you change from your original Profit First set up video 4 years ago to this one? Just curious, what changed for you?
very good info!
do you just use the profit funding for emergency fund or do you create a separate budget and split the profit there for emergency fund?
Hello -- Thank you for putting these resources together, thank you! I have question about COGS. Does that refer to printing costs? For example, I sell decks of cards. When I sell one, should I be taking the cost of having produced that out of the sale price like I would fees from PayPal? And what distinction do I need to make between sales tax TAP and business tax TAP?
Hey Nick, just started listening to the Profit First audiobook and I wanted to implement it into my freelancing business, but we've been using YNAB for a few years now personally and I knew there had to be a way of doing Profit First with YNAB and then I found your video - so thank you!
I'm wondering what you think about retirement savings for me. Is that something I should be saving for out of my business account, or saving for out of my personal account from the payment I make to myself? I'm trying to save 20% of my business revenue in my SEP-IRA account each month, but I've been doing that out of what I pay myself each month. But now I'm wondering if should just do that from my business account as part of my "Owner's Comp". Maybe a separate category for Retirement Savings that's a part of my monthly Owner's Comp?
Do you have a retirement savings account in your business YNAB?
Would you recommend starting a new budget from scratch if you already have a budget but it isn’t as “clean” definitely realized I need to change some YNAB habits haha
Hi thank you so much for all your great videos! I’ve been using YNAB now for 2 years and it’s truly changed our lives.
I’m starting a real estate business and would love to implement the profit first method. How would you suggest implementing this system for a commission based business? Would you use your income and use your CAP percentages and budget only for that month? Trying to figure out how that would be since In a commission based business you can have a really great month and Have income And then no income the next month.
Currently since I just started and I’m not making any money yet I have a category in my personal budget named business until I generate income and then will budget it out in a separate business budget account
How would you have money leftover if you’re allocating the entire incoming check?
A question about owners comp--if in our personal life we have a lot of CC debt, wouldn't it make the most sense to transfer excess money made to owners comp for the current month...and NOT bank it for the next month? If you earn so much you could avoid nasty CC fees, it doesn't make sense to pay yourself in the future 2-3 months when you need money now...right?
Hey Nick, what kind of accounts are the PayPal and Stripe budget accounts? Are they Cash?
Checking accounts in YNAB :)
@@mappedoutmoney Beautiful, thanks man. You're my new hero for financial advice.
Nick is your Stripe account unlinked? I couldn’t find Stripe in the YNAB system.
Yes it is.
I really wish it would link, but it won’t. So I manually enter them.
I wish my stripe account was linked too :/
Nick, I'm using the Square payment processor and was delighted to find your method! I think I'm missing something because when I do the split transaction from the Square account the tbb amount stays in the Square account. When I reconcile my accounts this won't add up. What did I miss?
I love YNAB. I just wish they didn’t get rid of the one time purchase option. Do you still use YNAB for your business?
I do. That’s all I use for my business books. And it definitely makes it worth it for me since I run my business from it.
@@mappedoutmoney that’s awesome! can you run both your business and personal on 1 account? Also do you use the account sync feature for banks?
@@pauldittus Yup. And Yup.
I use just one account, and I do sync my banks to make it quicker!
@@mappedoutmoney awesome! Maybe I’ll give YNAB another go. I miss it a lot. The principles that it’s based on are great for financial success.
@@mappedoutmoney Would you consider doing a video where you show how to use YNAB to prepare for tax time? Like how you manage the excel export and prepare a Schedule C? I'm currently running Profit First out of YNAB but I'm also still using Xero and I'd love to get rid of it.
Nick True, When you pay your taxes, which category u use for this purpose ? Do you just take it from Biz Savings->Taxes or you treat it differently ?
Thank you.
Hi Nick, I complete new to YNAB and had imported my spending transaction to YNAB (over the past year) to the YNAB account that I just created today because I want to see a report how what I have spending over the past year. Do I just leave the budget amount emty for the past month and do it for this month or it's better to just do it from scratch and jsut start the accounts with the current starting balance
What transaction I should do when I purchase Inventory for sale. My business is not service-based it is based on inventory sale. Thank you
You'll want to use a "cost of goods" category and subtract that from Ready To Assign before taking out your percentgages.
@@mappedoutmoney thank you for the reply, so for the sale I should use “cost of goods” or “cost of goods sold” category?
@@mappedoutmoney Thank you so much for the reply so when the sale happens I should use “cost of goods” category or “cost of goods sold”?
@@electroturn1025 So when you buy inventory, that money leaves your bank and should be categorized as "cost of goods" or "cost of goods sold" no need to use both of them.
Then when you sell an item and make money, that inflow comes into your bank and should go into "ready to assign"
Hope that helps!
For Side Hustles do you recommend setting up a separate Profit First Budget in YNAB? For example, I am bringing in money from avenues like DoorDash, an MLM, Mercari, and eBay where I am setting aside money for taxes since they send a 1099/W-9 and pay for expenses like gas and supplies. Since our debt has been paid off, the money I am earning for this is building our savings and goals for opening a photography business. After watching this series on your channel, I am wondering if Profit First and setting it up in YNAB applies here?
I honestly would not. I think that's too cumbersome for Side hustle money.
Instead, just put all that into your main account and use the payees to show the income streams.
Example: When you get paid from DoorDash, the category should be "To Be Budgeted" and the payee should be "DoorDash"
Then when you go to the income v expense report you can see your income breakdowns.
But no, I don't think you separate full-blown budget for side-hustles.
Just make a category for your photo business savings and hold the money there.
But once you start that photography business, then you will want to have a separate budget for that in my opinion.
Ultimately, it's personal preference, but that's what I would do.
@@mappedoutmoney That makes complete sense. I agree it is an absolute preference. It seems extra to have a budget for side hustles. Plus it feels like I am barely bringing in any money when I sort it all out. Thank you so much for your advice.
would you say more about why you like to track fees from stripe?
what categories for open invoices. Specifically for COGS?
okay, I'm on step 10; isn't there a way to just allocate the percentage from the revenue just like the profit first system into different accounts instead of just coming up with a number that you wanna pay yourself and then figuring out if your revenue can even allow that?
setting up the percentage off the overall revenue would be way more doable than coming up with a random amount desired for owners comp in my opinion....?
So do you have Stripe and PayPal set as unlinked? I get a TON of tiny transactions that come through both. What’s the best way to handle those?
Where would you categorize physical media such as DVDs and USB sticks for content delivery ? in general equipment , or it's own category? or does that fall under cost of goods?
For me, I get that stuff so irregularly that I would put it all under "general equipment"
Now, if it's a core part of your business and something you're doing a lot of, I would create a specific category for "Phsyical Media" and put it there.
I also do this for large upgrades.
For example, a couple years ago I spent $1200+ upgrading all my camera and microphone equipment. So I created a specific category to save for that equipment and purchase it when I was ready.
I don't personally use USB sticks that often, so it'd be a minor expense and I'd use general equipment.
But to me, this isn't cost of goods. This is definitely an operating expense.
Let me know if that makes sense!
@@mappedoutmoney thanks for the reply! , this makes the profit first method in YNAB seem so much less daunting , your previous video , I saw all the accounts and physical moving of money , and decide I would wait a while to try it out , with your much simplified version , i'm going to try to put it to use.
@@MyBudgetLife Awesome. Yes, I totally know the previous video was ridiculous. haha, so glad this feels more approachable.
Let me know how it goes and reach out if there's anything I can do to help!
For someone just starting a business and using personal money to pay for start up costs before have business checking and credit cards set up, how do we record those transactions? You mentioned setting up a Line of Credit if we intend to continue to use personal money. I'm trying to figure out how to show the expense for tracking purposes and show that it's been paid via personal money and I'd like to have it paid back at some point. But I'm not sure how to set it up in YNAB since the LOC is on budget. Thanks.
Hey Tiffany,
I would reccommend not doing a separate budget until you do have a real life separate business checking/savings/CC account. If you're putting business expenses on a personal CC and then paying it off with a personal Checking, I would just include a "business" group inside of your normal YNAB budget.
Then once you're ready to open a business checking account and have a separate card for business purchases, I would move a chunk of money from personal --> to the business and run the business off of that.
Lastly, once you do that, you can add a "liability" into your business budget in YNAB to track the amount of money you have used on the personal side and make sure you pay yourself back.
Let me know if that makes sense!
@@mappedoutmoney Makes sense. Thanks!
@@mappedoutmoney I also had this question.
This is great! Thank you for replying to Tiffany's question. What would you suggest if the start up money was actually not dipped into?
Would you still create a liability or just incrementally transfer the unused funds back to the personal account after the Profit Savings have accrued a comfortable cushion?
Blessings,
G
Thank you for this! How did you manage to add the credit card emoji to your credit card payments category? It seems to be locked and I am unable to edit the name.
Hey Mark, you can change the category, by changing the account name for the CC. So right click on the account name and change it there!
@@mappedoutmoney Thanks for the reply! I managed to change the account names of my credit cards just fine, as well as all other categories in my main budget area. The credit card payment category itself though won't let me edit the name. When I right click on it my only option is to hide the category.
@@MarkHimley Hey Mark, yeah, the CC categories are the one categories you can't edit. In order to edit the CC payment category, you have to edit the CC account name. If you right-click on the account name, you can change the CC payment category by changing the name.
If you'd like the CC emoji for the whole group, the only way I know to do that is a toolkit setting. It's a browser extension that can do this: www.toolkitforynab.com/
@@mappedoutmoney Ah yes thank you!! Just got the toolkit and that is exactly what I was looking for - to add the cc emoji to the credit card payments category. Thank you very much!!
You may have answered this already but wondering what if i i want to use profit first principles for personal accounts in addition to business accounts. I have personal income along with business. I dont do w2 to pay myself in my business. I take draws. My business is a staffing w2 company with employees and payroll. The service is staffing and equipment rentals that i outsource with a 20% service fee. My personal accounts have the usual but with investing account for real estate savings
Thank you!! A question Ive been wondering. We are doing this as a side hustle, so hubby and I have full time jobs. Do we still take a compensation, just make it less of a percentage??
Definitely still take compensation and profit. If you aren’t being compensated and making a profit it’s not a side hustle, it’s a hobby.
I got a question regarding quarterly profit distribution.
In reality, technically the profit distribution is paid in the form of a dividend (when LLC is concerned)? If so a dividend is taxed both on the company site and on private site. Does it mean that i pay dividend to myself in the amount of 0,5x profit (for given quarter) and all divident related taxes are already included on my profit first taxes account ?
How can I transfer monies out of an account without it being an expense?
How would you handle sales tax? I'm assuming since sales tax is not my money I am taking it out before any calculations for owners comp, expense and what not expect for after income tax is calculated.
I handle it in COGS (Cost of goods)
So you're correct, I take it out before running my percentage routines against the To Be Budgeted.
Budget for it immediately, and then run your percentages against what's left over.
@@mappedoutmoney appreciate it Nick. I just started YNAB for personal stuff and then had the great idea of profit first with YNAB and here you are 🤙🏼
@@anthonygodines2661 no problem. Glad it helped.
Sir
Does profit first work with a weekly income
were would rent and electric go ? in services ?
For business? OPEX - probably have a separate group entirely to track the "office" and call it Office and then put rent, utilities and other office expenses in that group.
Hi. How do you "sweep" money from Paypal or stripe daily?
has anything changed since this vid?
Do you account for and manage sales tax in YNAB?
I’ve tried YNAB and I feel like I can’t justify $12/month just for this software. Does anyone know of anything else I can use that’s cheaper/free?
How you you put in any of the SBA loans (EX the EIDL loan)
Hey Michael!
That's a good question.
What I would do is bring the money in as "To Be Budgeted" and use the "Payee" to denote that it was the EIDL or the PPP for example.
Then I would create a specific category (inside my profit first groups) just for that EIDL/PPP. And put all the money there.
I would NOT run my profit first routine against this money because if you're trying to get that loan forgiven, it has to be spent in very specific ways.
So I would hold that money in that specific category, and then move it from that category to other expenses as needed based on what is forgivable.
Hope that helps!