Profit First method.
In plain English
The Profit First method is a popular small-business cash system that flips the usual order. Instead of profit being whatever is left after expenses, the business moves a fixed percentage of every deposit into a separate profit account first, then runs operations on what remains. It uses several bank accounts, for profit, owner pay, taxes, and operating expenses, so the money is physically separated. The idea borrows from pay-yourself-first budgeting: by capping what is available to spend, it forces the business to be profitable by design rather than by accident.
01Why it matters
Many small businesses run at a loss because profit is treated as leftovers, and setting it aside first is a simple behavioral fix that makes profitability deliberate.
02The math, step by step
On every 1,000 dollars of revenue, an owner moves 50 dollars, 5 percent, into a separate profit account before paying any bills. Operations run on the remaining 950 dollars, so profit is guaranteed rather than hoped for.
03What this is NOT
Profit First is NOT a formal accounting method or a tax rule. It is a behavioral cash-management habit using separate accounts, not a change to how the books or taxes are calculated.
04Receipts
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