Here at Northwest Accountancy, we use a mix of Profit First and Xero to build success with our regular clients. Profit First is a great way to make sure the important things get covered in your business – namely that the owners get paid first! If you have ever taken home a short pay because the business couldn’t afford it that week, this sort of structure is for you.  

And the great news is that you can set and forget a bunch of stuff with the right business bank accounts, making it super easy!  

What You Need for Profit First Bank Account Basics 

There’s five basic accounts in Profit First methodology, to help clarify the purpose of the funds at a glance.  

• Income Account – this is where your income lands before you sort out what to do with it! This is the BSB and account number on your invoices, where PayPal or Stripe drops your payments, or even your PayID for the business. All income arrives here.  

• Profit Account – This is called the Profit First method after all! You set aside a percentage of your income into the Profit account. Usually, it’s 5% to 10% of the income, however this may vary. These funds are left alone!  

• Owner’s Pay Account – makes sure you get paid! Often 30% to 50% for a small business, regularly paying this amount to the account shows you when and how you need to adjust to ensure there’s enough money in here to ensure you and your family get fed, housing and home expenses covered!  

• Tax Account – This account takes away so much stress. By regularly adding to this account, when you complete your BAS or annual taxes, you’re prepared and ready to pay if needed – and have extra cash for profit if not needed! Usually Australian taxes are 15 – 30% of your business income as a sole trader. 

• Operating Expenses – this is where you pay all your bills from.   

How do I know what percentages for each account?  

The best way to find out exactly what your percentages should be is to track your past spending. Find out where your money is going right now, and start with the question – am I paying myself enough? Is there any profit at all?  

From answering these questions, you’ll know if you need to increase prices, lower expenses, (or both!) and start making changes in your business. This can be a slow process as you adjust to the new format, but better to make changes steadily with the end goal in mind than get stressed and give up early. You deserve to get paid generously and regularly, and it must be built in from the very foundations of your business structure.  

A business’ role is to support the owner, not the other way around! 

Click here to see our YouTube video on how to figure out what your percentages should be for your unique situation! 

Is Profit First the best way to get the owner paid?  

Yes. Many small business owners prioritise themselves last – and this leads to burn out and unhappy partners, children, and communities. If you’ve got questions, or would like to know more, drop into the office, call for a chat or book a free Zoom chat today!  

We also cover using and setting up Profit First in our new Unexpected Bookkeeper community hub coming in March. If you learn better with real people, here’s your chance to join our wait list! Unexpected Bookkeeper is a mix of community, resources, Zoom chats and coaching, and even some coworking to make sure you’re on your way to success. Join the waitlist here!