The Therapy Business Podcast
We know how challenging growing a therapy practice can be, and don’t think it should require an accounting degree just to run your business. If you own a solo or a group practice, we’re here to help you build a business that creates more time, makes more money and serves more people.
The Therapy Business Podcast
How to Pay Yourself More (without hurting your business)
Elevate your financial health with actionable insights on how to pay yourself effectively as a business owner while managing personal stresses. Learn the importance of integrating your personal and business finances, along with practical steps to achieve financial wellness.
• Sharing a personal story about financial struggles due to a family health crisis
• Emphasizing the connection between personal and business finances
• Outlining the Profit First cash flow system and its importance
• Detailing five essential bank accounts for effective cash management
• Exploring the framework for a personal finance snapshot to define financial needs
• Stressing the need for a consistent paycheck rhythm
• Discussing optional accounts for enhanced financial security
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*Intro/outro song credit:
King Around Here by Alex Grohl
A few weeks ago, I hosted a webinar called how to Pay Yourself More Without Hurting your Business. This is by far one of my more popular workshops that we lead and I thought what a perfect opportunity to share it with this audience. I highly, highly recommend you listen to this. You take notes, you get into a place where you can actively listen to it and really put into place what we talk about. This is an actionable workshop where I guide you through tangible steps. There's four steps that we guide people through in order to increase their paycheck, make sure that they are paid consistently and that their business is paying them what they deserve. I hope you enjoy it.
Speaker 1:I want to take you guys back and tell you a personal story to me. Take you back to 2019. I was attending a conference in September up in Newark, new Jersey. I was in the Newark airport the most magical place on earth if you've ever been there and I'm sitting at a bar. It was packed. They were doing renovations there, so there was just a lot of people in our terminal, and so I finally made my way to the bar and, right when they brought me my drink, my phone rings and I look at my phone and it's, it's my wife and I'm going. Okay, if she's calling me, it's probably important. So I pick up the phone and she's just sobbing. She's in tears. I'm freaking out because I'm going, okay, something's wrong with the kids, what's going on? And through her her tears, she's finally able to tell me that she just found out she had a brain tumor. So for months before that she'd been complaining about feeling like she had cotton in her ear, feeling like maybe her face was going numb, and me I'm like, oh, you're just being a hypochondriac, it's probably fine. But she did start going into doctor's appointments and getting it checked out and while I was gone she got an MRI done and that's when they discovered that she had a brain tumor. The next few weeks were just a whirlwind. I mean, we're scheduling surgeries, she's writing letters to our kids just in case she doesn't make it through. We found this out, I believe, on September 26th. November 5th is when she went in for surgery to have the tumor removed. She found out she was going to lose all of her hearing in one ear, all of these things, and I'm so happy to say that it was a success in that sense of that, really, outside of losing her hearing, which is a huge deal. We're back to normal life and she's able to live her life like normal.
Speaker 1:But those times were scary, and the time even after the surgery. For months I became full-time caretaker, part-time dad and even less part-time business owner. My business got pushed way down. I wasn't able to market. I wasn't able to do much. My clients received emails saying, hey, I'm going to be out of pocket for probably 30 to 60 days, and it was a scary time. It was an overwhelming and terrifying time.
Speaker 1:Now, how this happened years before, a couple of years before, I probably wouldn't be here today with my business. I probably wouldn't have survived it. I probably would have had to go back into education kicking and screaming because I taught elementary school, and so please don't make me go back. But I wouldn't be here. And the reason is I had a money system. I had something in place. Somebody showed me a couple of years before how to manage my finances in a way that makes sense, in a way that is reasonable, way that has cash reserves, so that I can take time away when life calls.
Speaker 1:Now I share the story for a couple of reasons. One business and our personal lives are deeply intertwined. They're connected. Your business and your personal life are so connected. It's not just business, it's everything. And then the other piece of that is money bridges that connection. If we are struggling on one side, we're going to be struggling on the other side. So how can we overcome that?
Speaker 1:If you're stressed about money, if you are in this place where you are feeling underpaid, if you are overworked, overwhelmed, you're burnt out or maybe on the brink of burnout, feeling like if I can't make this work soon, then I need to just go back to a nine to five or just one emergency, one phone call in Newark airport, away from everything falling apart and the money going away and the business going away. If you're feeling anywhere on that spectrum, you're definitely not alone. In fact, that is one of the most common struggles we see when somebody comes in to meet with us on a consultation. It's that they are not paying themselves enough, that their finances are a mess on both sides, and it's because the business is not supplying enough cash to them as the business owner. And here's the funny thing is that no one quits their nine to five to work longer hours for less money, right? So at some point you likely had a nine to five job, whether in corporate America, in education.
Speaker 1:I didn't leave that world so that I can make less money, be more stressed out, be working a lot more hours, truthfully, being a worse boss to myself than I ever would have had in that world. That's what I'm going to guide you through today. I'm going to guide you through this exact thing. How do we break free from this? How do we create a business? How do we become a boss to ourselves that we love, that takes care of us financially, that takes care of us, doesn't make us work way more than we want to be? That's burning us out. How can we get to that point? Step one is in your business, we need a simple cash flow system. We are certified profit first professionals. We believe in this system so heavily. This is the system I discovered in 2017 that I implemented in my own business and then became a Profit First person, profit First professional where we could teach our clients how to do this. Now we guide people through this and again, it's something that resonates with us, and the reason is because it is all about our behavior. It's not this accounting jargon.
Speaker 1:I came from the world of being a fourth grade teacher. Yes, I've always been a serial entrepreneur. I was a musician, did that full time. I've always had side hustles, side businesses, but this was the first time I'd really launched something on my own and I didn't know what a cash flow statement was or how to read it. I didn't know what a balance sheet was or how to read it. Now I do, but when I was starting the business, that was all completely foreign to me and every time I had somebody talk to me about how to manage the finances of my business, they were using words that were flying right over my head and it wasn't helpful and it wasn't something that I could really do. It wasn't until I found this system that it resonated to the point of.
Speaker 1:This makes complete sense. Anybody with any kind of business savvy could do this, and the reason is is because it leverages bank accounts. It's not pulling reports and trying to make a decision on what does my P&L or my balance sheet say. It is using bank accounts. It is so that at any given time, all you have to do is pull out your phone and look at your bank account to see how am I doing in operating expenses? How am I doing in taxes. How am I doing in profitability? So we recommend at least five bank accounts. Now you can do more and at the end I'm going to share a few other ones that you could possibly add in. That might be helpful, but these core five are essential to the success Now.
Speaker 1:The first one is the income account. An income account we call the serving tray, so this is where all deposits go. So, however you receive money whether it's cash, check, stripe, anything they just get deposited into that income account. The reason we call it the serving tray is because you're not supposed to eat off the serving tray, unless you're like me. On Thanksgiving, then you're going to pick at it, but in your business we're not going to do an eat off it, meaning we're not going to spend anything out of it. It is literally an account where cash just comes in and sits and accumulates. Then we disperse that money from the income account to these other accounts, basically serving it out onto these other plates.
Speaker 1:We're going to have money go into profit, money go into an account nicknamed owner's pay. That's you. That's what we are really honing in on today. Is that owner's pay account Money going into operating expenses, so that when you again look at your account can I afford to pay this invoice or to run payroll? It's no longer trying to do financial gymnastics in your head. Looking at one account, you can look at operating expenses and immediately know I'm going to overdraft or nope, we've got the cash to supply it. And then taxes making sure you have the funds to cover your taxes, your personal income taxes, any taxes for the business.
Speaker 1:Now, this is all done based on percentages. We have a free quiz on our website. Again, I'll share this at the very end so that you can take that quiz. That's gonna tell you exactly what percentages your business should be aiming for. So every business, every size business, is a little bit different, but it's based on percentages. So let's just say, for example, you have money and I say maybe once a week, on Friday, you log into your bank and you look and you have money sitting in that income account. We're going to take maybe 5% of it and move it to the profit account. That way you're instantly, permanently profitable. We're going to move 50% into the owner's pay account. We're going to move maybe 15% to the taxes and make 30% into operating expenses. Again, it's very different depending on your business, what size your business is, but in general, those are some an idea of how it works. And then the next Friday we're going to do the same thing. Whatever money is accumulated that week in income, we're going to start filtering through these accounts.
Speaker 1:The other reason I love this system is if something's going wrong, if you go to pay something and there's not enough money in the operating expenses account, that is the business raising a red flag saying here is where the problem is. If you go to pay your taxes and there's not enough in the tax account, red flag. So instead of this issue where we have one checking account with all of our money and we get to tax time and all of a sudden we don't have any money for taxes, we have no idea what went wrong. We don't know. Did I overspend? Did I pull too much money out? What happened? This is going to flag it saying operating expenses. We are spending more than the percentage that we're putting into that account, so something needs to be fixed. This is where the problem is. This is where we need to address it.
Speaker 1:Now, a system in your business. Again, I'm just going to cover this briefly. We teach this in depth with all of our clients. So if you want to know more about Profit First for those of you I know there was a good chunk of you who said what is it? You or maybe you had just heard of it. At the end, we'll talk about a way that you can get in touch with us, and also we have more resources that we'll share with you that you can dig into on your own to get a better understanding of how this system works.
Speaker 1:But this is the key. The key is getting organized with our business, because if our business finances are a mess, our personal finances suffer, and if our personal finances are a mess, our business finances suffer. Going back to that, our business is deeply connected and money is the bridge to everything. So while having a system for your business is crucial it is so important you have to have it so is having a system for your personal finances. Business is personal. Whatever people say, it's not if they're saying, don't take it personally, it's just business, not true. Business is personal. Our business is our baby. Our business is everything we put into it. We took a huge risk to launch this thing, to grow it. It is us, and so we take things personally. We make business decisions based on emotion or personal feelings or fears or insecurities, or excitement or ambition. There's so many things that come into play with our business that is directly tied to you as the business owner, so we need to have a system for our personal finances as well.
Speaker 1:So that's step two. How do we figure that out? Well, we need to have a personal finance snapshot. So taking a personal finance snapshot this is critical. You have to get clear on your personal finances. There's a few things we just need to know. How can your business pay you what you need if you don't know what you need? If you don't even know what you need on the personal side, how can we make sure the business is paying you that? So there's three questions we need to ask ourselves to dig into this in order to pinpoint what is that number that I need to be taking home to make sure that my personal finances are covered, that me, as the business owner, I'm taking care of and I'm not bringing that personal stress into my business.
Speaker 1:The first one is what do you need to cover your expenses? This is what we would call just your basic needs. What do I need to pay the mortgage or the rent to keep the lights on, keep food on the table, gas in the car. What does that bare essential need be? And that means we're not going out to eat, we're not doing the extra stuff. What is that core number going to look like? Now, that's not what I want for you. So just know that we're not striving, or, as a first milestone, depending on where you are in your business, that we at least need to take home enough to make sure you're not getting evicted or foreclosed on. Then we can focus on.
Speaker 1:The second one is what do I need to cover my ideal lifestyle? This is with travel. This is with kids and their activities. This is the subscriptions to Netflix or Hulu or whatever else. It is.
Speaker 1:So, adding all of those things in, what does that number look like? What does the business need to pay me in order to live that ideal lifestyle, the lifestyle we want to be living? You can add in things that maybe you're not currently doing. You're like man I wish. I wish we could do X, y or Z. Let's add that in and figure out what does the business need to do, because that's our target, that's what we're aiming for is how can we get the business to pay you that on a consistent basis, and then, what is your business currently paying you? So those are the three questions we need to get clear on. I'm going to show you exactly how to do that. So what is it currently paying you? What do you need to cover your core expenses? And then, what do you need to cover that ideal lifestyle?
Speaker 1:Now we do have a spreadsheet, like I said at the end. I'll share this with you. It's just called a personal finance spreadsheet, or a snapshot, and it just is a spreadsheet where you plug in your income Maybe if you have a spouse who earns an income, all those things and then it just has a non-comprehensive list of commonly seen expenses, and then there's space for you to add in your own things, because I know everybody's personal budget is a little bit different. What I would say to do is you go first with your core expenses, so plug in all your core ones, get that first budget and then come back and do that second one, because we need to create two, essentially two personal budgets. We just need to get a picture of those two things. One is our survive budget. Like I said, we just need to get a picture of those two things. One is our survive budget, like I said, and then the other one is a thrive budget. What does life look like if we are thriving financially? What is our spending look like?
Speaker 1:Now, once we know those numbers, we have to have a system in place for the personal side, right? So, just like we were talking about bank accounts on the business side, we believe in using bank accounts on the personal side. Now, our clients who come to us we teach them about having at least three core accounts. One of them is the bills account. This is all your bills, like your mortgage, your electric bill, the things where I always say you're not going to impulse spend on it. That's a good way to think about it is those bills. And yes, michelle, thank you Great point Different banks. So, wherever you're banking, it's a great idea to have your personal accounts at a separate bank and your business accounts at a different bank.
Speaker 1:It is, as we talk about all of this, that, business being personal, we need to do our best to separate ourselves from the business and the personal, to treat ourselves like the owner of the business and not really meshing those two worlds. We're going to talk about that because I know a lot of people are dipping into their business to cover bills here and there or to pull money out if something comes up and they need some cash. So we're going to try our best to separate that out and we'll talk more about that too. So that's a great point. Thank you for sharing that. And all that to say too, we do have the chat open, so feel free to drop comments, questions. At the end We'll do some Q and a uh, so drop those in. We also have a question section. So if you have something specific that you really want to make sure we see and that we answer, you're welcome to do that. Uh, if it's something you don't want to share with the whole group, uh, we do have a private message tab where you can care of.
Speaker 1:All right, so we need three core accounts. So the bills is just your basic needs, again, your bills, the things we're not gonna impulse buy. Then we have a spending account. This is for your groceries, your food, anything, clothing, whatever. You're gonna be spending money on a separate account for those things. And then a savings. So this would be your emergency fund money to set aside for the future. Now, again, this is just a minimum, so if you want to add more. You can always add more If you're saving up for Disney World, if you're saving up for a new car, if you want to have a separate groceries account and a separate restaurant account. The more the merrier. It's just really up to you. What makes more sense? I always say does more accounts make you feel more at ease? Does it give you more clarity or does it stress you out more? And that's a question you just ask yourself. If it makes you feel better, then open more accounts. If you're like, nah, the more accounts there are, the more stressed out, I am, you're already thinking Craig is an insane person for mentioning having three accounts as it is, then maybe just stick with the three. All right, that is the system we need.
Speaker 1:Once we know that survive budget and that thrive budget, the next step, step three, is to work backwards. What percentage of your revenue should be going to your paycheck? Remember when we were talking about the profit for system in our business? We are putting a percentage into that owner's pay account. Well, what does that percentage need to be? So a real, simple math equation for this. I don't want to get too mathy on you. I promise this is the only time we do is to take that income and divide it by your revenue. So if you need $50,000 a year to cover your expenses and your business is making $100,000 a year, well, we're going to divide 50 by 100 and we're going to multiply it yeah, 50,000 by 100,000. And we're going to multiply it by 100 to get a percentage which is 50%. We know that we need to take. 50% of what we bring in is going to be coming home to you as the business owner to make sure your needs are met.
Speaker 1:Now what we do for our clients when they come into us is we look at all your numbers and your spreadsheets and we tell you here's what the business has been paying you and we can kind of see that that gap I told you that's important to know is what has it been paying you currently? So what did it pay you last year? Was it paying you 50%? Was it only paying you 40%? Maybe that's why there's all that stress and anxiety on the personal side and why you're overdrafting or you're running into those issues.
Speaker 1:Then we need to start allocating that percentage to your owner's pay account moving forward. So starting now is if that's what you need to cover your personal expenses, we got to put 50% into that account. Now, a common question when I say this is Greg, what if my business can't afford me? What if I can't put 50% in there? What if I ran the numbers and I need a hundred percent of what I'm bringing in to be coming home to me, and that's just not feasible. Well, that just means something needs to change. That's the story that's been written for your business and we need to fix that.
Speaker 1:So the first thing I would say is let's go back to that survive budget. What was that needed income to cover your core expenses? What percentage would that be? Maybe it's 30% instead of 50%. So it's a little bit easier for you to to implement that starting out, and we just have to go into the personal side and start making some cuts. Maybe we need to cut some fat in our operating expenses. If we're looking and we just don't have the wiggle room, let's just say again for example, all you can do is allocate 40% to you right now and you're like I need to make up 10% so I can be taking home that 50 that I need. Well, then let's dig into our operating expenses and start seeing where can we maybe trim some fat. Where's some unnecessary expenses that we might need?
Speaker 1:We recommend a great, great exercise. It's called keep cut trim. This is something where you just you could do it on a piece of paper. You just make three columns One's keep, one is cut, one is trim and you go through all of your expenses. You can download a vendor list on QuickBooks. But what? All of your expenses, the things you're paying for regularly, things that you have to keep, like a license or something that if you got rid of it, your business could not function we're going to put those in the keep column. We can't do anything about them. They have to stay. Then we have a cut column. This is the expenses that it's like.
Speaker 1:You know I could probably do without this, whether even if it's just temporarily you know I was just recently. I use a subscription to help me get guests for my podcast and for me to be guests on other podcasts, and I had about 60 days where I was just pushing pause on doing that. It was during the holidays. I was like I'm not going to be meeting with people or doing interviews or trying to get on other shows. So I paused that subscription for 60 days. It was a cut for just a month or two, while I didn't need it. It was an unnecessary expense that was probably just going to keep charging even though I wasn't going to be utilizing it.
Speaker 1:So, going through and finding those things, what can I cut, even if it's just temporary and then trim is where are there opportunities for me to find a cheaper price, whether it's with a different provider, whether it's the same provider, maybe they have a different option that I could downgrade to. Maybe it's just picking up the phone and calling and saying is there any way you could work with me and get me a lower rate on this, whatever this subscription, whatever you're doing. So going through that and finding those opportunities to see where can I maybe try to pull out more percentage points that I could start paying to myself to take home. And then, on the flip side, we could do the exact same exercise in your personal budget. Go into your personal budget, see if you can cut back on a lot of different things to bring your needed percentage number down and then see if you can help them kind of meet in the middle. You're cutting on the business, you're cutting on the personal. Can we bridge that gap so that you can find a percentage that might work and then otherwise start where you can. So if you are trying to take home 50,000 a year and it's just not a reality right now, start where you can. If it's 40%, start there and then, every month, or every month or two, just increase that percentage by one to 3% until you finally get there. It's just this gradual thing where that's what we guide our clients through too. It's here's where you are today, here's where you need to be. We're going to just gradually get you there, because it's not healthy to lose 30 pounds overnight. We don't want to just, tomorrow, jump in and say, okay, we're going to raise your, your pay by 20% and cross our fingers that the business survives it. We want to be really intentional, really purposeful, and that means going slow and just increasing percentage points as you go. All right.
Speaker 1:Step four, the final step in getting this all together, is setting up a consistent paycheck rhythm. If you are like most business owners, you're not paying yourself regularly, you're not paying yourself the same amount on a consistent basis. And if you're like and you don't have to admit it you're welcome to, if you want to, in the chat. But just as a self-reflection, if you've been, have you ever been guilty of dipping into the business to cover those personal expenses? I was kind of alluded to that earlier. If you have that, that is so common. I would say almost everybody who comes to us has struggled with, is either currently struggling with it or has. They're not paying themselves the same amount every month or every week or every other week and they're dipping in as they need stuff If their personal budget gets low. The number of people who say I don't even have a paycheck, it's just when I need money I pull it out of the business to cover my expenses Again, if that's resonating with you, again, it doesn't mean it's okay.
Speaker 1:It just means that you're not alone and we need to fix that. And that's because we want you to treat yourself with the same respect you would demand from someone else. What I mean by this is imagine you went and interviewed to be the CEO of a company and they loved you. They said we want to hire you. You're perfect fit for our company. You're like awesome, you're great. Can I ask you what's the salary? What's awesome, you're great. I can ask you what's the salary, what's, what's my pay going to be? And they just laugh at you and they go oh, there's no, there's no salary, it's just when you need money. Uh, just let us know. Like so, if your rent is due, just let us know We'll, we'll give you enough money to cover that bill, just as needed. So just let us know. When you money, we'll give it to you. Uh, I wouldn't accept that job. Who would want that? That doesn't make any sense. And yet that's how we treat ourselves as the business owner. And the inverse is true too. If you were to go hire a CEO for your business and they said hey, I'm just going to dip my hand in the business account anytime I need money, so don't worry about it. If I need money for myself, I'm just going to pull it out, you'd fire them pretty quickly. Right?
Speaker 1:We have to separate ourselves. We have to treat ourselves with that same respect. I, in my personal life, I'm Craig, and then in my business, I'm the owner and CEO of Daisy Financial Coaching. Daisy Financial Coaching has entrusted me to run the business, and it's going to treat me with the same level of respect that if I was the CEO of Apple that they would. So that's how we want to really envision it. Treat yourself with the same level of respect that if I was the CEO of Apple, that they would. So that's how we want to really envision it. Treat yourself with that same respect that you would demand from someone else. We need to respect ourselves, and it's so easy for those lines to get blurred, but the more that we can separate it, the better.
Speaker 1:Then, once we know that we need to create a pay schedule so you choose the frequency that's the beauty of being a business owner is what is my pay schedule going to be? Is it going to be weekly? Is it going to be monthly? It's going to be biweekly. We need to get on a regular frequency. Then, once we've decided, what is that pay schedule going to look like? It's okay to start small. It's okay to kind of mesh both worlds.
Speaker 1:If you've been just dipping in as you need money, there's going to be growing pains. So maybe start paying yourself a few hundred dollars a week or a few, or, however, if you're doing weekly, a few hundred dollars a week, and then, if you need money, you can still dip in and we're just going to, as time goes by, increase how much you're taking home every week, and that means less and less you're needing to dip into the business and give yourself 30 to 60 days a cutoff date and maybe 60 days out. This is from that point on I am not dipping my hand into the business. If it's, if the business isn't paying it to me on my paycheck, then either I need to increase my paycheck or I need to figure it out on the personal side. So choose your frequency. I pay myself monthly because that's how I was paid when I was teaching and it's just how my brain works now. But again, you can choose biweekly, weekly, however you like.
Speaker 1:And then we are big believers in quarterly profit bonuses. So you remember that profit account that we were talking about. That's not just for show, that's not just your vanity account to say, look at me, I've got some profit over here. It's there to pay you. It's there to pay you a bonus for being the business owner. Your owner's pay account, we always say, is your paycheck, your salary for doing the day-to-day work, for wearing all the hats, for putting in the hours in the business. The profit account, that's your reward for owning a business. That's your reward for taking the risk, putting it all on the line to own this thing and to run this thing. So the profit account at the end of every corner.
Speaker 1:So I told you, we're accumulating money in there, you're putting a percentage into that profit account, we're not touching it, and then at the end of the quarter we take whatever's in there and half of it can come to you as a bonus and half can stay in the business as a cash reserve, an emergency fund, a way to build some cash nest egg for the business side. It's also a great way to. If you're trying to pay off debt, you can use those funds to really hone in on that, whether on the business or the personal side, taking the money out of that profit account to just mail down those credit cards or the business loan or the line of credit, whatever it is. You can use those funds for that. Otherwise, we say that the half that you take home, don't reinvest it in the business. Spend it on yourself, whether it's a vacation, whether it's just, depending on the size of your business, even if it's just a taco from the taco truck down the street, celebrate it, enjoy it, because that is the sign of a profitable business, no matter the number. Your business is profitable because you intentionally set that money aside. All right.
Speaker 1:And then what we want to do is get organized. Like I said, we want to unblur those lines. So we need to move any automated personal finances out of the business. So if you're paying for personal expenses inside the business, let's move them out. Now there's a lot of nuance to this, because I do know that things like cell phones, you're using it for the business purposes, right. So gas bills, all these things, your car, maybe you're driving around with your car for the business. So where does that fall? I typically say if you wouldn't have it this is the rule of thumb I go by is if you wouldn't have it without the business, so meaning I wouldn't have this phone if I didn't have the business well then that's a business expense. If, yeah, I would still have a phone If the business closed down tomorrow, I'd still have a phone then I'm going to move that to the personal expenses. I can still write it off at the end of the year. It's still a write-off. It's just that I'm not going to be running it, cashflow wise, out of the business. And if you decide if you do, or however it's structured, at least using those funds from the owner's pay account, because it's not an operating expense. It's really your owner's benefit. Same with the car payment, same with gas, whatever you're lumping in there. So try and separate those out. If you have any other expenses coming out of your personal account that are business expenses, let's move those to the business. And again, any personal expenses coming out of the business, let's move that to the personal accounts.
Speaker 1:Now I told you there's some optional extra accounts that you can add into your business that we often see. An emergency fund I feel like is essential. I know I said five core accounts. That's what Profit First suggests. I usually have our clients open up six because we want an emergency fund, or a vault is what we call it. So just somewhere to put that cash at the end of the quarter, when you take half to you from profit, half going into that cash nest egg, this is the account it would go in so that we can build up those funds. I recommend about three months of overhead in that account. That means three months of expenses and three months of your paycheck would be ideal, just depending on the size of your business. But enough cash there to make sure that if everything collapses you can at least run the business and pay yourself over that time and maybe that number is your survive budget. Maybe you go on to that for a few months, but just having some cash there just in case, a retirement account. So if you gave up your 401k when you left the corporate world, then it's okay to set up an account for yourself that would go into your retirement. So investment accounts whether it's a Roth or a SEP or whatever it is an account, so you're intentionally setting it aside. So take a little couple percentage points off of owner's pay and every week put some into that retirement account Giving.
Speaker 1:If you want to be charitable with the business intentionally, you can do that. If you want to give back to your team, you can have a profit account for your team members so that at the end of the quarter you can pay out bonuses to your employees. You could have a health benefits account. So if you're a small business and maybe you don't have a health plan for your team but you have to go pay for health insurance in the open market, well, you can open up an account to make sure that that's covered. Or even vice versa, if you're supplying health benefits for the whole team, you can have an account earmarked just for that, and then one more that's not listed on here is a payroll account. So a lot of clients like to take operating expenses and payroll and separate them, so they have money going into payroll and then they have money going into operating expenses just to make sure they always have enough to cover payroll. Thank you.
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