Ep. 120- Profit First Q&A Extravaganza: Essential Accounts, Revenue Breakdowns, and Business Evaluations Unveiled

Ep. 120: Profit First Q&A Extravaganza: Essential Accounts, Revenue Breakdowns, and Business Evaluations Unveiled

Today is a dedicated episode for questions and answers, where Danielle addresses the most commonly asked questions in depth. Profit First's guiding principle is "When in doubt, add an account." Therefore, we will discuss essential accounts that every business should have and additional accounts for specific scenarios. We will also tackle inquiries related to actual revenue, compensation for owners, distributions, and how to allocate these funds. Moreover, you will gain insights into evaluating a business you might be interested in acquiring. This episode is filled with valuable information for entrepreneurs, so don’t miss it.

IN THIS EPISODE:
[01:18] What does real revenue mean
[06:32] How many accounts should I have if I operate with goods or subcontractors, et cetera
[08:38] What if I receive a paycheck? Does it still go through the owner’s pay account
[09:34] Do I only do allocations on the 10th and the 25th
[12:06] Do you need a profit account and a separate owner’s pay account if you take your pay in distributions
[13:28] Can I use Profit First to identify which business to buy? Danielle gives an example of what not to do
[17:30] Is it ever a good idea to run a profit assessment on a large business representing many services, or how should it be done
[21:38] Submit any questions you have to profitfirstnation.com

KEY TAKEAWAYS:
Never purchase a business without first looking at the owner’s taxes.
There are five accounts a business needs; an income, a profit, the owner's pay, a tax account and the operating expense account.
Self-employed people who receive their income irregularly should make allocations based on when they receive income.