Profit First
Profit first is a system where money is immediately divided up into a number of different checking accounts for its intended purpose. Targets are slowly moved as to cut expenses and increase profit, this also makes it much easier to manage the business from a quick glance at our bank account, rather than trying to look at financial reports.
Accounts
Income - All income is deposited here. Money flows out of the accounts from this account.
Operating Expense - All expenses are paid from this account.
Profit - Quarterly Disbursements
Owners Compensation - For Bi-Weekly Salary for the owners.
Tax - Used for paying taxes accrued.
Equipment - Account for purchasing equipment, all small or large value equipment would be purchased using this account.
Vault - TD Ameritrade Brokerage Account. This is 3 months of savings, 20k/month.
Bi-Weekly Transfer
Twice a month you will
- use this form
https://docs.google.com/forms/d/1H4JoYOWyPBiTQeY2Vlt1q6IZ09gokTN2bwpCnK_PwZY/edit
- Make sure all revenue is deposited into the income account.
The main thing that could be missed is checks. Make sure we don't have any checks that in trello - Bolt Projects Board - Computer List - Under Day to Day Tasks. that have not been deposited yet.
- Transfer the entire income account ending in 3801 into the various accounts we have
Use the Profit First Calculatorto see how much should be transferred into each account.
- Transfer $3000 from Owners Comp to Operational Expenses to cover your bi-weekly salary.
- Put Total amount in Equipment account in the Equipment slack channel
Minus 2000 dollars from this as we need to keep at least 2000 in the account to avoid 15 dollar account fees.
- Transfer 5% of the Down Payment Account to the Schwab Account
Log in to Schwab Account with the creditals in LastPass. Once logged in, click Move Money > Online Transfer. Select JP Morgan Chase account to our corperate account, enter in 5% of the down payment account balance and press continue.
- Buy shares of VOO with all remianing funds in the Schawb Account.
Quarterly Actions
Use the profit sharing calculator in this google sheet.
Quarterly Disbursements
Quarter 1—January 1 to March 31
Quarter 2—April 1 to June 30
Quarter 3—July 1 to September 30
Quarter 4—October 1 to December 31
Look at the money in the Profit account before you add any deposits from this new quarter. This money in its entirety will be distributed to the owners and any others participating in profit sharing.
45% to Matt
45% to Ryan
10% to Greg
Quarterly Evaluation
Now you will move the current allocation percentages closer to your target allocation percentages. Make these in small 1-3% changes so that the changes are gradual.
Yearly Actions
If you owe taxes at year-end, this is the one time you can pull from the profit account to pay for it. If you have too much money in your tax account, move them to the profit account and take them as distributions.
If you have at least 3 months reserve in the profit account and you have made the disbursements for this quarter, you can use that money for capital reinvestment.