To use the Profit First Calculator, input your total income received and any deductions for materials and subcontractors. Then, specify the percentages for profit, owner's pay, taxes, and operating expenses. The calculator will compute the real revenue and allocate the specified percentages accordingly.
Real Revenue = Income Received - Less MATS & SUBS
Profit Allocation = Real Revenue * Profit Percentage
Owner's Pay Allocation = Real Revenue * Owner's Pay Percentage
Tax Allocation = Real Revenue * Tax Percentage
Operating Expenses Allocation = Real Revenue * Operating Expenses Percentage
Remaining Percentage = 100% - (Profit Percentage + Owner's Pay Percentage + Tax Percentage + Operating Expenses Percentage)
Suppose you receive an income of $10,000 and have $2,000 in materials and subcontractor costs. With profit, owner's pay, tax, and operating expenses percentages set at 5%, 50%, 15%, and 30% respectively, the calculator will determine your real revenue as $8,000. It will then allocate $400 to profit, $4,000 to owner's pay, $1,200 to taxes, and $2,400 to operating expenses.
When using the Profit First Calculator, consider the impact of your allocations on your business's cash flow and financial health. Regularly review and adjust your percentages to align with changing business conditions and goals. This tool is designed to provide guidance and should be used in conjunction with professional financial advice.