Running a therapy practice is about helping people—but it’s also a business. And like any business, if the financial side isn’t handled well, it can quickly turn into a stressor instead of a source of stability.
That’s where the Profit First for therapists comes in.
Profit First is a cash management system designed to help small business owners—like therapists—prioritize profit and make sure they always have enough set aside for taxes, expenses, and, most importantly, their own paycheck.
Let’s walk through how it works and how you can use it to create financial stability in your therapy practice.
What Is the Profit First Method?
Profit First is a financial system created by Mike Michalowicz that flips the traditional way of handling business money on its head.
In his book, Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine1, he lays out a simple yet powerful approach to managing cash flow—one that ensures you actually keep some of what you earn.
Most business owners operate under the mindset that profit is whatever’s left over after covering expenses.
Michalowicz challenges that thinking. Instead of following the usual formula:
Revenue – Expenses = Profit,
he shifts it to:
Revenue – Profit = Expenses.
This small but important change forces you to prioritize profit and taxes first, rather than treating them as an afterthought.
Instead of hoping there’s something left at the end of the month, you decide upfront how much you want to take home—and build your business expenses around that.
To make this work, Profit First relies on a system of multiple bank accounts, each designated for a specific purpose. Similar to the “envelope cash method”, if you’ve ever heard of that.
This structure helps you stay on top of your finances without needing to micromanage every dollar. And the best part? It’s designed for business owners—not accountants. That means it’s straightforward, easy to implement, and perfect for therapists who want a clear, stress-free way to manage cash flow.
How Can Profit First Work for Therapists?
Therapists often struggle with cash flow because of inconsistent income, insurance reimbursement delays, and unpredictable expenses. So, it’s easy to feel like money is coming in but disappearing just as fast.
The Profit First method gives you a way to manage your cash without wondering if you’ll have enough left for taxes or your own paycheck.
Here’s how it works in practice.
Instead of having just one business bank account where all your money comes in and out, you set up multiple accounts, each with a specific purpose. When a payment comes in—whether from a client or an insurance company—you don’t just leave it all sitting in one place. You immediately divide it into different categories: some for taxes, some for profit, some for your own paycheck, and the rest for business expenses.
This means you’re never scrambling at tax time, never wondering if you can afford to pay yourself, and never overspending just because there happens to be extra cash sitting in your account.
How to Set It Up Without Overcomplicating Things
The full Profit First system suggests opening five different bank accounts, but that can feel like a lot to manage right away. For therapists, a simpler setup often works just as well.
At the very least, you’ll want three main accounts: one for operating expenses, one for taxes, and one for profit. Every time money comes in, a set percentage goes straight into each of these. Think of it like this:
- The tax account is untouchable—it’s there so you never have to panic when your tax bill comes due.
- The profit account is a reward for running a healthy business. Even if it starts small, it ensures you’re always building toward financial security.
- The operating account is what’s left to cover rent, software, continuing education, and all the other costs of running your practice.
You can also add an owner’s pay account if you want to keep your personal salary separate from your business expenses, but the key is to keep things simple enough that you’ll actually stick to it.
Things to Keep in Mind
One of the biggest mistakes therapists make with Profit First is overcomplicating the system right out of the gate. If managing multiple bank accounts feels overwhelming, start with just two: one for taxes and one for everything else. As you get comfortable, you can add more.
Another thing to watch out for is incorrectly categorizing bank transfers in your bookkeeping system. If you use QuickBooks or another accounting tool, make sure you’re recording transfers properly so they don’t show up as income or expenses by mistake. It’s a small thing, but it can create major confusion when it’s time to reconcile your books.
And finally—this might sound obvious, but it’s worth repeating—keep your business and personal expenses separate. Mixing them creates a bookkeeping nightmare and can cause tax problems down the road. If you ever need to pull money from your business for personal use, do it as a formal transfer, not just by swiping the wrong card.
Best Bank Account for Profit First: Why We Recommend Relay Financial
If you’re going to use the Profit First method, choosing the right bank can make all the difference.
Traditional banks often make it difficult to open multiple business accounts, charge unnecessary fees, or require in-person visits just to make simple changes.
That’s why we like Relay Financial. (And no, we aren’t affiliated in any way with this bank.)
Relay makes it easy to implement Profit First without the usual banking headaches. You can open up to 15 accounts with no extra fees, move money between them effortlessly, and even set up separate debit cards for each account to track spending within each “bucket.”
This makes it much simpler to stick to your allocation plan without constantly second-guessing where your money is going.
Another huge advantage is that Relay integrates seamlessly with bookkeeping software like QuickBooks and Xero. This means you don’t have to manually track transfers or reconcile endless transactions—your books stay updated automatically.
How to Get Started with Profit First Today
The first step is simple: open at least two new bank accounts—one for taxes and one for profit.
Even if you don’t implement the full system right away, getting into the habit of setting aside money for taxes and paying yourself first is a game-changer.
Next, decide on your percentages. A good starting point might be setting aside 20–30% of revenue for taxes, 5–10% for profit, and whatever you need for your own paycheck. What’s left in your operating account is what you have for business expenses. If it’s not enough, that’s a sign to cut costs—not to shortchange yourself.
Work With an Accountant Who Practices The Profit First Method
If all of this sounds like a lot to figure out on your own, we can help.
At Traktion, we specialize in accounting for therapists and know exactly how to tailor the Profit First method to work for your practice.
Whether you need help setting it up, tweaking the percentages, or just making sure everything runs smoothly, we’re here to take the stress out of your finances.
Ready to get started or have a question we didn’t cover? Simply head over to our Getting Started page to book a quick call. We’re always here to help.
Until next time!