Page 28 - Profit assessment Template v1

Some common questions around multiple bank accounts:

More bank accounts will result in a lot more bookkeeping work. Is Profit First really worth the effort?

The additional bookkeeping time required to manage and reconcile multiple accounts for Profit First is
negligible, and possibly even more efficient than one using just one account. With Profit First you simply
need to reconcile the deposits and periodic transfers from the Income account. All expenses and
payments come from the OpEx account. And all the other accounts are typically a single transfer
monthly or bi-monthly depending on your business, and a single transfer out at those times. The
accounts are easy to manage and reconcile. More importantly the Profit First benefits of instantly
knowing what money is allocated for which purpose will have profound effects on the financial health
of your business.

We are trying to reduce expenses, but aren’t multiple bank accounts going to cost me more in bank
fees?

There are many options with banking providers to reduce, and even eliminate, bank fees on multiple
accounts. From tax holding accounts to online accounts that don’t charge fees for internet transactions,
most banks have options depending on the products they offer and your individual banking needs.
We will consider a combination of local, national and online banking options which are ‘Profit First
friendly’ to minimize possible fees.

What happens to any money that I currently have sitting in a bank account when we start the Profit First
implementation?

There are a couple of options that we can review, and select the most appropriate option based on our
analysis at that time. Typically we look at the following two options first, and then adapt from there:
(i) Ensure that there is enough money to cover the OpEx account for the month, and then
allocate the remainder based on the Profit First Percentages from the Profit Assessment
(ii) Ensure that there is enough money to cover the OpEx account for the month, then allocate
to cover one month of Owner’s Pay, then ‘fill up’ the Tax Account, and then transfer any
remaining balance to the Profit Hold Account (not the current Profit Account)

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