Owners Pay: The Profit First Way
And it is once again time to talk about the Essential 7 Profit First Bank Accounts. For those of you who have been with us for a while, this might sound a little bit like I’m beating a dead horse here. I bring up the Essential 7 Bank Accounts all of the time. However, every post and every video is someone’s first. And if I only get to offer one piece of advice to a curious business owner, I’m gonna tell them about the Essential 7. That’s how important it is.
Essential 7 Bank Accounts
What are the essential 7 bank accounts? For those of you who are just learning about Profit First, welcome! We’re glad to have you here. The Essential 7 Bank Accounts are exactly what they sound like: 7 bank accounts that it is essential you open for your business. Why?
Parkinson’s Law
In 1955 a man named Cyril Parkinson wrote an article for The Economist that opened with a bit of advice all business owners need to hear.
“Work expands so as to fill the time available for its completion.”
Those 12 words are critical to know as a business owner. The more you have to work with, the more you will use. If you pour all of your money into one account, you will think you have a lot of income to work with, and so your expenses will rise to meet it. If you want to be successful as a business owner, tricking yourself into thinking you’re making less money than you are will stop you from spending the money you need.
The Essential 7 and Business Partners
So what does all of this have to do with Owner’s Pay? Well, one of your accounts should be an owner’s pay account. But if you have business partners, there is going to be some debate about who gets paid what. Who should be paid from the owner’s pay account? What percentage would you be paying everyone? Who does and doesn’t count as an owner? All of these important questions are answered in the video. Give it a watch!
To watch my full video, click below!
We will be offering a lot of advice on our page here, but we also would be happy to help you out on a more personal level. Feel free to hit us up if you need help preparing your taxes.
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