I recently wrote about The Best Money Decision I Ever Made in My Business.

The best money I made was setting up a separate bank account and transferring ten percent of my income to that bank account.  The result I got from that simple decision had a life-changing profound effect.  It made my business profitable.

I thought I was doing wonderfully with the money side of my business, and then I read Profit First.

If setting up one bank account to allocate my profits was a good idea, setting up multiple bank accounts to allocate money for the other areas of my business is a phenomenal idea.

Reading Profit First was my lighting in a bottle moment.  Profit First for Realtors is the method to get control of the money side of your business. Profit First for Realtors gets you focused on simplifying the money side of your business.

With the Profit First for Realtors method, we look at our gross commission check as a money pie.

The money pie must be split four ways as follows:

  • Profit
  • Owner Pay
  • Taxes
  • Operating Expenses

Most Realtors make the costly mistake thinking that all of the gross commission check belongs to them.  I’m telling you now that is the stupidest thinking you will ever have about your gross commission check.

Thinking all your gross commission check belongs to you will result in financial disaster.

  • You end up getting a tax surprise each year because you didn’t pay Uncle Sam.
  • You spend more money than you earn.
  • You live paycheck to paycheck every month
  • You drown in money anxiety.

It’s no way to live life.

The first step of Profit First is to set up some bank accounts.  At a minimum, you will need five business bank accounts.  Here are the Five Bank accounts you need:

  • Income
  • Profit
  • Owner Pay
  • Taxes
  • Operating Expenses

First, you need an Income bank account.  Every time you get a commission check, you will deposit your commissions into the Income bank account.

Twice a month, you will divvy the money in the income bank account between the Profit, Owner Pay, Taxes, and Operating Expenses bank accounts.  After you move the money, there should be nothing in your Income bank account.

Now next time you get a commission check, you will put the commission check into the Income account.  The only time money moves out of the Income account is when you divvy it up to the other four bank accounts.

Once a Realtor understands the Profit First for Realtors money management system, a question naturally arises.

How do I choose a bank that will work for my Realtor business?

Here are a few options to consider in choosing a bank that will support Profit First for Realtors.

There are two main things to consider when setting up your Profit First for Realtor bank accounts.

  1. Look for minimal banking fees for the new bank accounts
  2. Look for minimal minimum balances for the new bank accounts. When I say minimal, $100 minimum balance is what I look for as ideal.  If you can get a zero dollar minimum that’s great.

One thing to consider is the features and benefits you get with your bank.  As they say, you get what you pay for.  Sometimes trying to get something for free just isn’t worth it.

Look at your Current Bank

If you have a good banking relationship already, tell them you want to add a few new bank accounts.  Explain the reason why you want to set up the bank accounts.  If you’re so inclined, send me your bankers’ information, and I’ll send him/her a free copy of Profit First.

If your current bank charges minimum fees, you can always ask them to waive the minimum fees.   Tell your banker that the reasons why you want to set up the additional bank accounts is so you can grow your cash reserves.  If your banker isn’t willing to waive the fees, you have to decide if the existing banking relationship continues to make sense for your business.

Look for a New Bank or Credit Union

I always recommend that people look to establish a banking relationship with a local community bank.  I love the two community bank I use.  I have a personal relationship with bankers at both banks. If you have plans to grow your business, there is going to be a time when you will need funds to nurture your business growth.  The best and least expensive source of funds will always be with a local community bank.

Community banks have as part of their banking charter to lend in the local community.  Typically lending decisions are made at the branch level.  The alternative is to work with a large national bank.  You’ll never get someone local making a lending decision at a national bank.

Here is an excellent resource to find a community bank close to you. Community Bank Finder

Here is an excellent resource to find a credit union close to you Credit Union Finder Credit Union Finder

I realize that switching banks is a royal pain.  There was a time (Trust me, it was before my time) when banks used to give toasters away whenever you set up a new bank.  The banks would do this because once a bank account is set up, people rarely switch banks.

Once you find the new bank that will work for you, it is time to set up your five new bank accounts.

Here are the five bank accounts you need:

  • Income
  • Profit
  • Owner Pay
  • Taxes
  • Operating Expenses

In my experience, you should plan on spending half a day setting up the bank accounts.  The time commitment may seem like a lot of time to take out of your day.  However, I can promise you that the time will be worth the effort.  Once the bank accounts are set up, you will have everything you need to take care of the money side of your business.

Here are the results you will get with your new Profit First for Realtors bank accounts set up:

  • Your business will be permanently possible.
  • You will guarantee that you get a paycheck to cover your personal lifestyle and expenses.
  • You won’t have to worry about paying a tax bill because you will have the money to pay the taxes
  • You will put establish spending limits for the operating expenses of your business.
  • You will have clarity on how money works in your business.

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