Profit First and Starling’s new feature, bill manager, are a perfect match
If you are already one of d&k accounting’s clients you will more than likely be aware of Profit First, as Dan loves it!
For those not familiar with it, the Profit First method is a way of making sure that you, as a business owner, are setting aside your profits first. This is then followed by saving for tax and your wages before business expenses are left. The method was devised by Mike Michalowicz and is something we have used for 5 years in our business and advise our clients to do the same. This ensures they always get a profit distribution every 3 months and save towards their tax liability.
At d&k, we also love Starling Bank and recommend it to most of our clients, as they are a great bank to work with as a sole trader or limited company due to its various benefits including, fee free banking and the technology is perfectly set up to handle a number of integrations with QuickBooks.
One of Starling’s best benefits is ‘Spaces’, where you can move money into a separate space and save it towards a specific goal – i.e., a vat, tax bill, new equipment or whatever you need. Being able to easily move money between the main account and spaces in-app has been one of the things that our clients love about Starling. It is easy to see what you’ve saved and how much you have left to spend on the day to day. Having this means that our clients are not worrying if there is a big bill they need to pay or an emergency where equipment is needed urgently, as they have the money saved just in case.
Now, using spaces has become even easier as you are able to pay bills directly from those spaces.
How does it work?
With the ability to set up direct debits or standing orders directly from that specific space you need, means you no longer worry about moving money back and forth every month manually.
Setting up the direct debit is quick and easy, and Starling will automatically move the right amount of money into the space to avoid you missing a payment, giving you the peace of mind that everything will be paid, and you have one less thing to worry about.
If there is an issue, Starling will let you know through app notifications straight away, and they will keep you updated on payments that have been made or money that has been moved with the app notifications as normal.
Why is it good to have?
By using this with Profit First, you can now use a space as an OPEX (operating expenses) account, moving the amount required for your recurring payments into this space when you calculate your allocations. Rather than having to use your main account as both the income and the OPEX account, it’s easier for you to then keep an eye on what your income is and what you’re spending on expenses.
Frequently Asked Questions
What if I want to cancel a direct debit?
If you or the merchant cancels a direct debit – the money will still move automatically into your account on the relevant day, but no payments will be made.
If you cancel the direct debit and the automatic payment between the main account and the space, these payments will stop.
I want to find out more about Profit First, can you help?
Absolutely! We use the Profit First method personally and have helped our clients follow the same principle. If you wish to get in touch, call Daniel on 01302 613 515 or email email@example.com.
Is it really this simple? I don’t want to do extra admin each month.
Yes, it really is this simple! As a busy business owner, you understand how much time is taken up on admin. This will help reduce that time on accounts admin, giving you more time to concentrate on your business growth and getting more profit.