Profit First Allocation Calculator
Split each month's income into profit, owner's pay, tax and operating costs.
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What is Profit First?
Profit First is a cash-management method popularised by Mike Michalowicz in his book of the same name. The idea is simple: instead of paying expenses first and hoping something is left, you set aside profit, your own pay and taxes the moment money comes in, and run the business on what remains. Each share goes into its own bank account, so you can see at a glance what is safe to spend.
This calculator does the split for you. Enter what came in and your target percentages, and it shows how much to move into each account.
The formula
Each account = income × that account's percentage
The four percentages should add up to 100%.
Worked example
You receive $8,000 this month and use 5% profit, 50% owner's pay, 15% tax and 30% operating expenses. You move $400 to profit, $4,000 to owner's pay, $1,200 to tax and $2,400 to operating expenses. You then run the business on the $2,400, which shows quickly whether your costs fit.
Choosing your percentages
- Start where you are. If you take no profit today, begin at 1% and raise it a point each quarter.
- Set tax from your real rate. Too little here causes a painful bill later.
- Treat operating expenses as a budget. If the share feels too small, that is the signal to cut costs or raise prices.
Frequently asked questions
What should "income" include?
The money you actually received, minus anything that passes straight through, such as materials or subcontractors billed to the client. The method calls this "real revenue".
How often should I do the split?
Many people do it twice a month, for example on the 10th and 25th, rather than every time a payment arrives.
What do I do with the profit account?
Leave it alone during the quarter. At the end of each quarter, take part of it as a reward and keep the rest as a reserve.