How can you say I have $50k in net profit this year?
This money is not in my bank account Mindi said to me late one afternoon in 2015. I was so excited as I reviewed the business financials with my client Mindi. She had a good year yet again.
Mindi was not happy because she had already spent this $50k. To her $50k net profit meant she would have to pay the tax man.
As I continued to show Mindi where the money was spent she still was not clear . I tried to make it as painless as possible but instead it only kept getting worst.
How many times have you experienced this same issue in your business. Your income statement showed you made a profit but the bank account said or no you didn't because it was a big whooping zero.
In my quest to help Mindi I read the book profit first written by Mike Michalowicz and became certified in profit first.
In the book mike explained how business owners use bank balance accounting to run their business. This meant what they see in the bank is how they operate their business.
If the cash was there to them that meant they have the money and can pay the bills.
This was half true while for some it seem to work. However not so fast ?
To help Mindi I decided to study the concepts of profit first, I implemented it in my business and this helped me to guide Mindi in leveraging her behavior of bank balance accounting to operate her business using profit first.
Whenever her income statement showed 50K net profit not only could she see the money but she had the money in her account to pay the tax man, she had reserves for rainy day months when business was slow, she was taking real profit distributions and money on hand for operations.
Now Mindi was actually seeing the profits in her business. Her use of bank balance accounting was now working the right way and with confidence she knew she had the money available to meet our business financial goals.
At ACR Bookkeeping let us help you leverage your behavior of bank balance accounting to make your cash balance a reality using the profit first system.
Join me for a free 30 min webinar that will show you an overview of profit first and how you can get started using what you already do anyway which is login to your bank note the balance and know with confidence that money to reward you first, to pay the tax man, pay your operation expenses, and meet all your financial goals are indeed available.