A good starting point is to divide your revenue into three main categories: expenses, taxes, and profit. These are not strict rules, but they give you a structure to follow. Here is a simple way to think about it:

Expenses: 40 to 60 percent of your revenue

This covers the cost of running your business, such as software, subscriptions, rent, marketing, and paying contractors. If this number is too high, it may be time to review your spending.

Taxes: 20 to 30 percent of your profit

This is money you set aside so you are prepared when taxes are due. A simple habit is to move a portion of each payment you receive into a separate savings account just for taxes.

Profit: 10 to 20 percent of your revenue

This is what you keep after expenses and taxes. Profit is important because it allows you to grow your business, invest back into it, and pay yourself consistently.

For example, if your business brings in 8,000 in a month:

3,200 to 4,800 may go toward expenses

1,600 to 2,400 may be set aside for taxes

800 to 1,600 can be kept as profit

When you start allocating your money this way, it becomes much easier to make decisions because every dollar has a purpose.

If you want help utilizing the Profit First Method for your business, we would love to work with you. Reply to this email or click here to learn how we can help you stay on track with your business finances and make better financial decisions.

See you next week!

Marnie Roberts ​​​