Do I need the 5 Profit First accounts?

The Profit First System is designed to align with natural human behavior – we tend to spend what we see available.  The purpose of separating funds into different bank accounts is to ensure that profit, owner’s pay and taxes are prioritized before expenses.

For many businesses, especially those receiving income from multiple sources, having a dedicated Income Account makes sense.  It allows money to accumulate for being rhythmically allocated to other accounts, reinforcing cash flow awareness and disciplined spending.  

However, captive insurance agents operate differently.  Since their income comes from a single carrier, they may have the option to direct deposit earnings into separate accounts automatically.  In this case the Income Account could be eliminated, streamlining the process.

Why Keeping Separate Accounts Still Matters

Some agency owners wonder:

“Can’t I just put all the funds into my Operating account and transfer allocations from there?”

The answer is no – here’s why: 

If all funds go into the operating account first, the account balance appears larger than it actually is, which leads to overspending.

• The profit account protects profit, ensuring the business is profitable.

• The Owner’s pay account protects the owner from taking what’s left over.

• Keeping a dedicated Tax account eliminates the last-minute scramble to cover taxes.

By reducing the available balance in Operations, agency owners are forced to evaluate expenses more critically.  It encourages smarter spending and requires the question:

Is this expense actually generating a return?

If the operations account cannot support all business expenses, that’s a clear sign that adjustments are needed.  This is where Profit First becomes invaluable – it reveals hard financial truths early, rather than when it’s too late.

Fewer Accounts vs Long-Term Financial Security

The Profit, owner’s pay and tax account exist to directly benefit the business owner – providing financial stability, reducing stress and ensuring the business is supporting the lifestyle of the agency owner. 

So, what’s the choice?

• Few accounts, but stay stuck in the same financial struggles?

• Separate accounts that guarantee profitability, financial security, and peace of mind?

The Profit First system isn’t about complexity – it’s about clarity, control and long-term success.  Which path will you choose?

Would you like help setting up a customer profit first strategy for your agency?  Book a Discover call today!