Profit First: Target Allocation Percentages (TAPs)
Using the Profit First methodology, you will accumulate money within your Income Account throughout the month. Then, on the 10th and 25th of each month, you will make your target allocation percentage (TAP) transfers into various purpose driven bank accounts. Again, your TAPs is a set percentage you allocate to each bank account based upon real revenue collections. Money comes into your Income Account, and you disburse it according to your TAPs.
Get your Target Allocation Percentage (TAPs) to learn more about the ideal percentages for each category: Profit, Owner’s Compensation, Tax, and Operating Expenses (OPEX). Note that the percentage allocation to the various bank accounts changes as a company grows. This change is particularly noticeable in the Owner’s Compensation category because the owner's role evolves as the company begins to scale.
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