A May Money Check-In Featuring Profit First
Welcome back!
With May comes many things:
- Taxes have been submitted… or extended, hopefully.
- “It’s gonna be May” memes have made their annual comeback.
- “May the Fourth be with you” has had its moment.
- The weather is warming up.
- Summer is lurking around the corner as if it did not just turn 2026 five minutes ago…
And for small business owners, May is also a great time to pause and ask:
Is my business actually profitable… or just busy?
This month, we’re talking about Profit First, the cash management system from Mike Michalowicz, or if you’re a big deal like me, you can have the author read it to you on audible here. Profit First flips the traditional accounting formula:
Sales – Expenses = Profit
To:
Sales – Profit = Expenses
This system, like all good algebra equations, proves that where you place the variable matters. Profit First moves profit from the leftover at the end to a priority at the beginning. That small shift can change the entire outcome.
Instead of waiting to see what profit is left over, Profit First encourages business owners to set profit aside first, then run the business on what remains.
At IQ Bookkeeping, we’ve seen this system work well for many clients who need a more intentional way to manage cash flow, plan for taxes, pay themselves, and stop treating profit like a surprise at the end of the year.
So before summer schedules, vacations, and “I’ll look at it later” season fully take over, let’s talk about making profit part of the plan. But first…
HOUSEKEEPING
As always, we won’t get started without a few reminders for upcoming dates to keep on your radar:
📅 2026 Estimated Tax Deadlines:
June 15, 2026 (Q2)
→ Covers income earned: Apr 1 – May 31
September 15, 2026 (Q3)
→ Covers income earned: Jun 1 – Aug 31
January 15, 2027 (Q4)
→ Covers income earned: Sep 1 – Dec 31
Friendly reminder: extensions give you more time to file, not more time to pay. If you extended your return but owed taxes, check in with your tax preparer so nothing sneaks up on you wearing a tiny villain cape. If you need more support with estimated taxes, check out our April newsletter with all the handholding below…
IT’S GIVING…TAX SEASON ENERGY
·
Apr 6
PROFIT FIRST
Profit First is a cash management system created by Mike Michalowicz to help business owners build profit into their financial habits.
The traditional accounting formula is:
Sales – Expenses = Profit
Profit First flips it to:
Sales – Profit = Expenses
The idea is simple: you intentionally set profit aside first instead, then operate the business using what remains.
It is not about ignoring expenses or pretending cash flow issues do not exist.
It is not about magically becoming profitable because you opened a new bank account and said, “good luck, babe.”
It is about creating a sustainable system that helps business owners make better cash decisions before the money disappears into the general operating account abyss.
WHY BUSINESS OWNERS LIKE THIS SYSTEM
A lot of business owners manage cash by looking at their bank balance, what the author calls, bank balance accounting,
If there is money in the account, it feels like there is money available.
But that balance is almost never all spendable cash. It usually always includes:
- Taxes – and the government is GOING to get their cut, one way or another
- Payroll
- Upcoming bills
- Inventory or materials
- Owner’s pay – many small business owners ‘eat last’ by paying everyone else and having nothing left for themselves
- Loan payments
- Slow seasons
- Future growth
- Actual profit – we are ALL trying to run profitable businesses, so it should be a priority
Profit First helps give each dollar a job before expenses take over.
For the clients we work with who use this method, we’ve seen how helpful it can be for creating more structure, discipline, and confidence around cash flow.
SO…HOW DOES PROFIT FIRST WORK IRL? (IRL= in real life)
Let me give you the breakdown. Basically, instead of your revenue sitting pretty in one general account, it gets separated into different bank accounts, labeled income, profit, owner’s pay, taxes and operating expenses.
All of your income gets deposited into the Income bank account. It serves as a holding account, no bills get paid here. Then either weekly or twice a month, 100% of that income account balance is transferred out to the other accounts in certain percentages.
These percentage values depend on several variables that will be unique to your business, so I strongly suggest that you read the book. The author gives easy step by step instructions to help identify the best percentages for your business.
Now, when you log into your bank account to see if you have enough money to buy the shiny new thing, you consult only the balance of the Operating Expense bank account, as that is your spendable cash.
This shift forces business owners to question their business a little differently.
Instead of asking: “What is left after I pay everything?”
You start asking: “What can the business afford after profit, taxes, and owner pay are reserved?”
Two very different kinds of decision-making.
TIPS & TRICKS FOR SMALL BUSINESS OWNERS
1. Read the book.
The author is very funny and relatable. He actually blew up several businesses before he developed this system so there’s plenty of self-deprecating humor to connect with, regardless of your business’s situation.
2. Do not skip the tax account
Profit brings excitement while taxes feel like the opposite of a party favor…
Setting aside money for taxes throughout the year can help prevent the annual “wait, I owe what?” spiral. This is the most valuable benefit our clients report.
3. Review your numbers before choosing your percentages
Before any decisions are made, make sure your books are clean enough to support these decisions. Messy numbers make allocation percentages harder to trust.
4. Use the system as a mirror
Profit First can reveal whether your expenses are aligned with your revenue. If operating expenses feel too tight after setting aside profit, taxes, and owner’s pay, that may be a sign to review pricing, subscriptions, staffing, overhead, or spending patterns.
5. Ask for help.
The author references a database of Profit First professionals you can hire for additional support. We are NOT on that list yet, but we are huge advocates for the system. We use it ourselves and cheer on our clients who also use it (keep reading to hear more), and we’d love to cheer you on, too!
MID-YEAR CHECK-IN
🎆Before summer gets busy, ask yourself:
Am I actually keeping profit, or am I just moving money around?
Set a 30-minute block of time on your calendar to review these questions within the next 30 days:
- What has my income looked like so far this year?
- What are my biggest expenses?
- Am I setting aside money for taxes?
- Am I paying myself consistently?
- Do I have profit built into my system?
- Do my books clearly show where my money is going?
This is where bookkeeping comes in and truly matters. Profit First work best when your numbers are accurate, up to date, and organized enough to support smart decisions.
CLIENT HIGHLIGHT
Sacred Transitions is a health collective specializing in midwifery care across the childbearing year, home or hospital birth, with a heavy emphasis on postpartum care. The practice owner, Rebecca Price-Wood, “birthed” her business model after working for years as a midwife in a scarcity system that collectively understood that new families were being let down by allowing postpartum mothers to struggle physically and psychologically. We believe in serving from a place of abundance, practicing clinical excellence and blending in warmth, ceremony, and high-touch care. Standard postpartum care with Sacred Transitions includes homemade medicinal foods helpful for postpartum healing, nine healing body treatments for the new mother, and community-style postpartum care for the first year.
“With the help of IQ Bookkeeping, we were able to provide spacious, attentive care for our clients while also building a sustainable practice that supports our team well. The Profit-First model has been a very positive shift. In a caretaking and service-oriented practice, it is easy to overextend and self-abandon. The Profit-First system has made more intentional Sacred Transitions financial standards, which allows us to offer loving, supportive care to our community within this framework, ensuring integrity and longevity for the business.”
These ladies are magic. They care so deeply for their community, and work hard to customize so much to meet their clients’ needs. We have found joy in supporting them as they implemented Profit First to ensure they will be around delivering babies and supporting moms long into the future. Being moms ourselves, we’re always captivated by the sights and sounds of these tiny people, and love being this small, supporting admin role in their care.
Learn more about Sacred Transitions:
On their website
On Facebook
On Instagram
THANKS FOR READING
May is a great reminder that the year moves fast.
One minute you are submitting tax documents, the next minute someone is making an NSYNC meme, and suddenly we are talking about summer plans.
Before the year gets away from your, pause to review your numbers. Ask yourself whether your current cash system is actually helping your business keep more of what it earns.
If you are curious whether Profit First could work for your business, or if you want a second set of eyes on your books, hop on Kendall’s calendar for a no-cost discovery call. IQ Bookkeeping can help you understand what your numbers are really saying.
If you enjoyed this, please tap the heart or drop a comment!
And finally, if you know someone who might enjoy reading this, please feel free to forward and spread the love.
See you in summer!
~Alecia
P.S. If your current profit strategy is “hope something is left after expenses”… just know I am gently sliding this newsletter across the table to you.
VIEW ON SUBSTACK – Originally posted on May 15th, 2026.
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