Ep. 150 - Q&A Quiz Edition
- Danielle Mulvey
- December 12, 2023
Episodes ending in 0 are Q & A sessions designed to help entrepreneurs operating their businesses in the zone of permanent profitability continue to thrive.
Danielle is excited to host a quiz edition to test your Profit First IQ.
There are no scores today, but the correct answers to these questions determine your prowess to do Profit First right to make your business permanently profitable. Don’t miss it!
IN THIS EPISODE:
[00:57] Danielle has ten quiz questions today. Question one is: What is real revenue
[3:07] Do owners who take a salary need a business compensation account
[4:25] How do you pay as little as possible in taxes
[7:57] Which account should you pay your taxes from
[10:45] What do you do with money in your existing bank account when you open a business
[12:15] Do we address debt by paying off the loans with the highest interest rate or use the snowball effect
[14:31] Can the owner’s compensation and tax account be combined into one account
[16:53] How do you calculate target allocation percentages
[21:45] Do business owners need separate profit and owner’s compensation accounts
[23:29] At what point in time should I start Profit First for my business
KEY TAKEAWAYS:
Real revenue in Profit First is determined by subtracting materials and subcontractor costs from total revenue. Allocations and financial decisions are based on this real revenue number.
Even if business owners take compensation as draws or distributions, Profit First recommends maintaining separate accounts for owner's compensation (acts like regular payroll) and profit (acts like a bonus). This separation ensures clarity and prevents the business from becoming a personal piggy bank.
Profit First can be implemented in businesses at any stage, even if they are not yet profitable. Starting early helps establish good financial habits, and the system can be adjusted as the business grows and becomes more profitable over time.
