I was confused about why we were putting taxes in the expense account. But what you are saying is that, basically, a bookkeeper will only need to look at one account. You will only subtract the taxes needed and place them in the Operating Expense account. You would not dump the whole amount of Taxes in the Operating Expense account. As stated in your answer to another question below, the balance from the Taxes account goes to Profit. Is that Correct? Secondly, I feel it would be good to have a sub account on the expense account. One account for regular expenses say a subscription or bills and a second for miscellaneous expenses?
Hi! These videos have been really helpful. I have a couple of questions . 1. Are drip accounts helpful if income is completely irregular with multiple, varying size projects? Or would that get too complicated? 2. Do you see any common sub accounts of the OPEX account? I'm struggling with keeping the system simple when we have regular expenses and random expenses, combined with highly irregular income. 3. Do you find that you are able to avoid ACH fees for transferring to Bank #2 HOLD accounts? Or is that pie in the sky? --- Would also be interested in talking with your further. Thanks!!!
Hey Kelsey! It's hard to answer without knowing your industry or exact situation: 1. Drip accounts are usually great for varying project sizes and irregular income. That's really what they are for. We have a separate Drip Account video on our Profit First playlist if you want to check that out. 2. If you hone in and get your percentages correct, start doing regular allocations, and use a drip account, your OpEx account will start to balance out and it won't be a struggle to cover your regular bills. It does take a little bit to get in the rhythm of it. 3. It really depends on your bank. Some banks don't have the ACH transfer fee. Another alternative is using a check to do the transfer. If you'd like to chat more, we offer free Instant Assessments. You can schedule a call with us here: www.matterhornbizdev.com/workwithus
These five accounts should be at the same bank, and then another Tax and Profit accounts at a separate bank to remove temptation to dip into them! We explain this more in this video: Profit First Bank Accounts | The 5 Business Bank Accounts You Should Have! th-cam.com/video/QwydCAgB858/w-d-xo.html
At the end of the year, when federal and state tax is paid from the tax account - is the balance that wasn't used rolled over in to the next year's tax account? Or can the balance be withdrawn, or reallocated to one of the other accounts?
Your videos are so high-quality and to the point, thanks Abby! I've got the PF system set up in YNAB and I love it. One more question: How do you class the initial investment that you make when you first start your business? I took $1,500 out of savings to get my side-business going. I put that initial investment in an account called Working Capital and covered OPEX with it before revenue came in. I plan to eventually pay that initial investment back from Revenue. Is that the way you would set it up?
@@MatterhornBusinessDevelopment Makes sense - thank you! I see it now in #26 of the Profit First FAQ ... repay the loan in small bites via OPEX and hit it with big chunks from the quarterly profit distribution.
Just create and sync each bank account in your accounting software. Not subaccounts or anything like that. Each one is its own bank account and should be synced and have its own bank feed.
I'm trying to get my accounts set up to use Profit First - I can't figure out how to include the charges on my credit card? I use the business credit card for various expenses, subs and materials.
You would pay off the credit card from your Operating Expenses account. If you are putting charges on there for subs and materials, transfer money from subs and materials to OpEx to cover those charges.
Thank you for the video, I have a question I'm a beekeeper and I need to buy jars, lits and labels. Do I buy them from my expense account or my set aside profit account? If I buy other equipment like hives and machinery this wil come from my set aside profit account, like an investment, right?
Anything that is a business expense comes out of your Operating Expense account. The Profit set aside is for you to take half of each quarter as your reward as the owner! So you can do whatever you want with that quarterly distribution.
![[Live] : ONE 168 วันนี้!! "โจนาธาน vs ซุปเปอร์เล็ก"](http://i.ytimg.com/vi/0jIN65KgJsI/mqdefault.jpg)
If you have questions or need help implementing Profit First leave your questions and comments below and we will answer!
Thanks for the content
I was confused about why we were putting taxes in the expense account. But what you are saying is that, basically, a bookkeeper will only need to look at one account. You will only subtract the taxes needed and place them in the Operating Expense account. You would not dump the whole amount of Taxes in the Operating Expense account. As stated in your answer to another question below, the balance from the Taxes account goes to Profit. Is that Correct? Secondly, I feel it would be good to have a sub account on the expense account. One account for regular expenses say a subscription or bills and a second for miscellaneous expenses?
Hi! These videos have been really helpful. I have a couple of questions .
1. Are drip accounts helpful if income is completely irregular with multiple, varying size projects? Or would that get too complicated?
2. Do you see any common sub accounts of the OPEX account? I'm struggling with keeping the system simple when we have regular expenses and random expenses, combined with highly irregular income.
3. Do you find that you are able to avoid ACH fees for transferring to Bank #2 HOLD accounts? Or is that pie in the sky?
--- Would also be interested in talking with your further. Thanks!!!
Hey Kelsey! It's hard to answer without knowing your industry or exact situation:
1. Drip accounts are usually great for varying project sizes and irregular income. That's really what they are for. We have a separate Drip Account video on our Profit First playlist if you want to check that out.
2. If you hone in and get your percentages correct, start doing regular allocations, and use a drip account, your OpEx account will start to balance out and it won't be a struggle to cover your regular bills. It does take a little bit to get in the rhythm of it.
3. It really depends on your bank. Some banks don't have the ACH transfer fee. Another alternative is using a check to do the transfer.
If you'd like to chat more, we offer free Instant Assessments. You can schedule a call with us here: www.matterhornbizdev.com/workwithus
Great. Thank you
So i need different banks right? Ex, income could be pnc, profit can be td bank, etc ..
These five accounts should be at the same bank, and then another Tax and Profit accounts at a separate bank to remove temptation to dip into them!
We explain this more in this video: Profit First Bank Accounts | The 5 Business Bank Accounts You Should Have!
th-cam.com/video/QwydCAgB858/w-d-xo.html
@@MatterhornBusinessDevelopment thank you
At the end of the year, when federal and state tax is paid from the tax account - is the balance that wasn't used rolled over in to the next year's tax account? Or can the balance be withdrawn, or reallocated to one of the other accounts?
It can be reallocated to Profit. 😁
Your videos are so high-quality and to the point, thanks Abby! I've got the PF system set up in YNAB and I love it. One more question: How do you class the initial investment that you make when you first start your business? I took $1,500 out of savings to get my side-business going. I put that initial investment in an account called Working Capital and covered OPEX with it before revenue came in. I plan to eventually pay that initial investment back from Revenue. Is that the way you would set it up?
Yes, you would pay it back from OpEx, as you would a loan.
@@MatterhornBusinessDevelopment Makes sense - thank you! I see it now in #26 of the Profit First FAQ ... repay the loan in small bites via OPEX and hit it with big chunks from the quarterly profit distribution.
How would you set up an accouting software (Wave, Quickbooks ect.) for Profit first?
Just create and sync each bank account in your accounting software. Not subaccounts or anything like that. Each one is its own bank account and should be synced and have its own bank feed.
@@MatterhornBusinessDevelopment thank you
All employees are paid through operations acct, correct?
Yup!
If I collect sales tax, where should I put that until I pay it at the end of the month?
You should open another separate account exclusively for sales tax.
@@MatterhornBusinessDevelopment great. Thank you.
I'm trying to get my accounts set up to use Profit First - I can't figure out how to include the charges on my credit card? I use the business credit card for various expenses, subs and materials.
You would pay off the credit card from your Operating Expenses account. If you are putting charges on there for subs and materials, transfer money from subs and materials to OpEx to cover those charges.
Thank you for the video, I have a question
I'm a beekeeper and I need to buy jars, lits and labels. Do I buy them from my expense account or my set aside profit account?
If I buy other equipment like hives and machinery this wil come from my set aside profit account, like an investment, right?
Anything that is a business expense comes out of your Operating Expense account. The Profit set aside is for you to take half of each quarter as your reward as the owner! So you can do whatever you want with that quarterly distribution.
Matterhorn Business Development thank you for the reaction. The other half of the profit is for later investments right?
It’s left as a reserve. So you can use it for future investments or have it there as an emergency fund.
Cool break down, what state are you guys active in?
We are located in Florida but have clients across the country.
@@MatterhornBusinessDevelopment oh nice!
We're in Florida too!
Oh, cool! We’re in Clearwater. Where are you?
@@MatterhornBusinessDevelopment Broward 😁👍
Nice! Let us know if you ever want to talk Profit First.