Putting your Profits in their Place!!
Yesterday, I closed on my recent flip and actually made a profit. So what do you do with your profit? I recently read Profit First By Mike Michalowiscz and placed my profits into 4 areas.
1. Tax Account - to save for my 2016 taxes
2. Profit Account - this like the emergency account for your business
3. Expense Account - this obvious; however, this account should be where your business operates. Marketing, property purchase, etc.
4. Owner's Pay Account - what the owners will get paid for their role in the deal.
Hopefully this system can help prevent mine and your business from going broke or staying broke. Now, this system is not the end all. You still need to do your due diligence with each deal to make sure you have a profit or cash flow.
Comments (2)
Thanks for your post, Lizina! In real estate investing, we tend to talk a lot about how to do a deal and how to MAKE money but not enough about what to do with that money when it comes in... and I know more than one investor who wasn't quite prepared to divide up the dollars into all the necessary buckets. Thanks for sharing!
Kent Clothier, almost 9 years ago
Thanks for the positive response. The bucket I can't stand the most is that tax bucket. But I should appreciate the fact that I made money to even put in the tax bucket.
Lizina Green, almost 9 years ago