Purposeful . Profitable
How to Find a
Profit First
Friendly Bank
Sabrina Pelech
Chief Profiteer
9 MIN READ
Profit First is a tried and true system with over 150,000 companies having implemented the profit first method and the most common question is “What bank should I use for Profit First?” Here is the simple answer:
You want to work with a bank that does not charge minimum balance fees on checking or savings accounts.
Which leads to “How do I find that bank?”
Why go through the process of switching banks if you don’t have to? Start by evaluating your existing bank and review your current accounts. Talk to your banker and tell them you would like to set up additional checking and savings accounts. But, before setting up the accounts ask them if there are any minimum balance fees for the new (or existing) accounts.
“I believe Profit First is successful because of three characteristics: Intention, Allocation, and Organization. If we can make sure we carry these forward, we can make a system that works for us!"
If your existing bank does not have minimum balances and fees:
Congratulations, you already have a bank that is likely a good fit for Profit First. Since you are already talking to your banker, explain that you want to save more money at the bank, you know, like profit, and to do this you will need to transfer money between accounts often bringing zero-dollar balances to certain accounts.
This is why we encourage you to shop around for a bank that has no minimum balance requirements and low to no maintenance fees. It could also be helpful if your banker is aware of the Profit First system and the reason in which you choose to implement it.
Once your banker is up to speed it is time to set up your five foundational accounts.
- Income Account: All the income generated in your practice flows into this account.
- Profit: This account is where you will start accumulating your cash profit generated in your practice
- Owner's Compensation: This account will hold your Owner's Compensation until it is time to pay yourself
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Tax: This account will hold the money you have saved to pay your income tax bill
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Operating Expenses: This account will be where you pay for your operating expenses
Finding a New Bank
A great place to start your search for a new bank is to look at Community Banks and Credit Unions. These are some of the top choices of practices who implement Profit First because they don’t charge minimum balance fees.
In many cases they offer service packages that can be more tailored to your needs and are more willing to work to support your practice. The bankers tend to have less of a corporate approach to banking and are more connected with their communities. They want their business clients to succeed and are willing to work with you to find the best solutions to your needs.
In addition, community banks also tend to have the most secure banking platforms, and are better equipped to support small business.
In fact, here at Profit First Chiro we work with a small community bank and have multiple accounts set up there for our business.
No minimum balances. No fees. No problems.
Need to find a new bank? Grab our checklist bank checklist below so that you are prepared for your meeting the first time!
Tools to Find a Bank
Here is a great tool to find a community bank near you:
Here is a great tool to find a credit union near you:
Switching to a New Bank
Don’t get overwhelmed, I know the prospect of moving to a new bank can seem daunting. If you follow the steps below it can be an easy and painless process and remember you don’t need to do it all at once.
Here’s how to make switching banks painless:
- Locate a new bank that will work with you to keep your minimum balance requirements and monthly fees low or totally eliminated.
- Setup your 5 foundational accounts outlined above. Typically we recommend that the Income, Owner's Compensation and Operating Expense accounts are checking accounts. The Profit and Tax accounts can be savings accounts.
- Start by updating your banking information with all the ways you collect money. This would be your credit card processor, PayPal, insurance companies, etc. This might take time. Some processors want to verify the new account before sending the money there. Be patient.
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Once you have funds in your new bank account, either by routing your income there or by depositing funds, you can start moving anything that automatically withdraws money from your accounts to the new bank. This would be your payroll services, rent payments, monthly subscription fees, etc. Again the change might take time to take effect so be patient.
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Stop writing checks on your old bank accounts. You will need to certify that there are no outstanding checks on your old account in order to close it. Some banks make you wait up to 90 days of no activity before you can close the account.
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Once you have moved everything to your new bank, close out the old accounts.
Remember its always helpful to have the bank on your side, who supports you and understands what you are trying to achieve.
I realize this may take a few hours of your time over a few days to get initially set up, but don’t let that keep you from implementing the Profit First bank accounts.
I know that the benefits that you will see overtime will have you wishing you implemented Profit First in your practice sooner!
I mean, who doesn't want to be profitable?
Don't Let the Bank Lie to You
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