If you’re a business owner or freelancer, you know how stressful the budgeting hustle can be. There are so many questions: how much do you set aside to pay yourself? To spend on business expenses? Or to save overall? My sweet accountant, Venus, has ALL the answers in today’s blog post. Specifically, she’s giving us the low down on the Profit First method, which I implement in my business as well.
In case you’ve never heard of it before, Profit First is where you take out a percentage of your biz income for profit before you take out anything else. It’s kinda like a personal savings account — many financial advisors say that the easiest way to save is to put a set amount of your income into savings directly when you get your paycheck. That way, you never see the money as anything other than savings.
The Profit First method is similar. The idea is to put a set amount of business income (profit) aside before you pay yourself, buy new equipment, rent out your first studio, etc. We asked Venus’s some questions about PF. Here’s what she said.
Why is PF important for creatives?
One of the many reasons Profit First is important is because it allows you to take a salary *and* gives you the ability to pay taxes. No more worrying about whether or not you’ll have enough money in your biz bank account to cover everything — when you’re putting profit first, you definitely will.
Another reason is because it’s easier to budget. Once you take out your profit and see how much is left, it’s much easier to make business decisions on how to grow.
What are the rewards of PF?
Among many other things, the biggest rewards are the ability to travel, being able to separate home from work, systemized budgeting, easier growth (you know your numbers) and stress-free tax time; knowing how to track it and scheduling when to pay it.
What are the most common mistakes that creatives make when implementing PF?
Many creatives think they can implement PF out of their personal bank accounts. This is a no go! Additionally, many creatives think they can do their finances on a spreadsheet. Instead, I recommend an accounting software like Quickbooks.
What is the benefit of working with a Profit First Bookkeeper?
You wouldn’t trust someone who has only read a book about surgery to do surgery on you – you want someone with experience. It’s the same with a Profit First bookkeeper. Working with someone who knows PF through actually using it (not just reading about it) is your fastest track to success.
Plus, hiring someone who is certified has other benefits — they can provide guidance on implementing financial systems and bringing structure to your business!
Venus is one of the only Profit First certified bookkeepers out there — so we feel extremely lucky to have her! If you’re interested in the PF method or working with Venus, check out her website and services!
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