If staying on top of your finances is a struggle, it might be time to implement the Profit First method. It's a cash flow management system that helps small business owners—including therapists—take control of their money by making profit a priority instead of an afterthought.
What is Profit First for therapists?
Profit First for therapists is an adaptation of the Profit First method for private-practice owners. Instead of the usual Sales − Expenses = Profit, you flip the formula to Sales − Profit = Expenses: every time income lands, you set aside a percentage for profit (and taxes, and your own pay) first, then run the practice on what's left. Split across separate bank accounts, it gives clinicians a clear view of cash flow and keeps a solo or group practice profitable by design rather than by accident.
What is the Profit First method?
The Profit First method helps small business owners rethink how they manage cash flow. Entrepreneur Mike Michalowicz developed it after noticing that many businesses struggle with the traditional Sales − Expenses = Profit accounting formula.
Mike shifted his money mindset and developed a new formula: Sales − Profit = Expenses. This simple but powerful shift helped him gain control over his cash flow and grow his businesses.
The Profit First method involves dividing your income across multiple bank accounts, including one dedicated to profit. This gives you a clearer view of cash flow and helps you avoid overspending. Here's a quick overview of how business owners implement it:
You receive all payments and business revenue in your Income account.
You set aside a percentage of revenue in your Profit account before paying any expenses.
You divide the rest of your revenue across other accounts by expense category—typically Taxes, Operating Expenses, and Owner's Pay.
Instead of letting expenses eat into your profit margin each month, Profit First keeps your spending in check and makes profit a priority.
If you're wondering where to open multiple bank accounts for Profit First, Relay can help. Relay is an online banking and money management platform designed for small businesses, and it's the official banking platform for Profit First. With Relay, you can open up to 20 checking accounts with no monthly maintenance fees, then make percentage-based transfers from your Income account to your other accounts—and automate them when you're ready.
Who wrote Profit First for Therapists?
In the book Profit First for Therapists: A Simple Framework for Financial Freedom, Julie Herres adapts Profit First to the unique needs of private practice owners, providing an easy-to-follow framework for a perpetually profitable practice.
As the founder of GreenOak Accounting and host of the Therapy for Your Money podcast, Julie and her team have helped hundreds of clinicians build thriving private practices. She also provides tax, accounting, and Profit First consulting services to therapists.
You can purchase Profit First for Therapists on Amazon.
The benefits of Profit First for Therapists
In the mental health industry, profit can seem like a dirty word. But the truth is your clients need your practice to be profitable.
As Julie puts it, "Your business must serve you." You can't pour from an empty cup—and you can't effectively serve your clients if you're burned out and broke.
One of the biggest benefits of Profit First for therapists is that it helps you build a genuinely profitable practice. This cash management method can also help you:
Gain financial clarity: Separating revenue into multiple bank accounts gives you a better idea of the money flowing in and out each month.
Manage your money more effectively: Setting allocations for each account gives every dollar a clear purpose.
Prepare for large expenses: Saving a percentage of revenue for taxes or operating costs helps you avoid credit card debt.
Sustainably grow your practice: Prioritizing profit helps you hit your short- and long-term financial goals.
Have work/life balance: Putting profit first breaks the cycle of paying yesterday's bills with tomorrow's income, so you can build in paid time off and plan for seasonal lulls.
How Profit First works for therapists
Profit First for Therapists follows a framework similar to the original method, with a few modifications Julie made to suit practice owners.
The method creates cash flow clarity with multiple bank account budgeting. There are 5 core Profit First accounts a private or group practice needs:
Income account: all revenue and client payments go here.
Profit account: pay your business first by saving a percentage of revenue here.
Owner's compensation: use this to pay yourself a salary.
Taxes: set aside a portion of revenue throughout the year to make tax season less stressful.
Operating expenses: keep funds for rent, utilities, and software here.
Group practice owners may want to separate payroll from operating expenses. Payroll is often a group practice's largest expense, so a payroll bank account can make it easier to manage clinician compensation.
When you open your Profit First accounts, you'll determine your target allocation percentages (TAPs)—the amount of money you aim to move to each account. TAPs vary from one owner to the next; a solo practice's will differ from a group practice's. You might set a 15% TAP for your Profit account, while a group practice owner sets 10%. If those goals seem extreme when you're starting out, it's okay to start small—put 1% toward Profit and increase it over time.
Making your Profit First transfers
Once your accounts are open and your TAPs are set, it's time to make allocations. You'll need a frequency for your transfers. Some Profit First owners follow the 10/25 Rule, making transfers on the 10th and 25th of each month.
But there's more than one way to set a rhythm. Based on your practice's cash flow, you could make weekly, bi-weekly, or monthly transfers. The key is to choose dates that align with your payment and payroll schedules.
Finally, Profit First encourages owners to take profit distributions, typically every quarter. You might take 50% of the profits to reward yourself and reserve the rest for business investment and future growth.
If you aren't sure where to start, you can schedule a consultation with GreenOak Accounting for step-by-step guidance tailored to your practice, or listen to Julie's Therapy for Your Money podcast for more financial tips.
Advice from author Julie Herres
> "Profit happens on purpose, with every session and every clinician in your practice."—Julie Herres
We asked Julie for advice for therapists who want to implement Profit First, and she shared two tips.
First, changing where insurance payments are deposited can be a real pain, so she suggests using your current checking account as your income account, not your operating expenses account. Then open a new, separate operating expenses account for all your spending.
Second, if you have a group practice, payroll is likely your largest expense—so she recommends a dedicated payroll bank account to cover employee benefits, payroll taxes, and wages for administrative staff and contracted clinicians.
What is the best bank for Profit First for Therapists?
The right online banking platform makes it easier to implement Profit First. Traditional banks don't typically let you open multiple business checking accounts—let alone without monthly fees. Relay does business banking differently.
Our online banking platform caters to the unique needs of small business owners, including private practice owners. Relay is also the official banking platform for Profit First.
With Relay, you can open up to 20 business checking accounts with no overdraft fees, no minimum balance requirements, and no monthly maintenance fees.
Here are a few more reasons small business owners use Relay for Profit First banking:
Up to 20 checking accounts: with no monthly maintenance fees or minimum balances, you can set up deposit-only accounts and operating expense accounts for greater cash flow clarity.
Savings accounts with auto-transfer rules: open savings accounts and use auto-transfer rules to consistently move excess cash out of operating accounts and into savings.
Percentage-based transfers: make your Profit First transfers easily, and automate them when you're ready.
Streamline bookkeeping with accounting integrations: Relay's integrations with QuickBooks Online and Xero help you spend less time deciphering transactions.
Up to 50 Relay Visa® Debit Cards³: assign spending limits to each card so you can see exactly where your money is going.
Ready to take control of your cash flow? Open a Relay account today.
3The Relay Visa® Debit Card is issued by Thread Bank, Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used anywhere Visa debit cards are accepted.
Frequently asked questions
What is Profit First for therapists?
Profit First for therapists is a version of the Profit First method tailored to private-practice owners. You flip the formula to Sales − Profit = Expenses, setting aside profit, taxes, and your own pay first each time income lands, then running the practice on what remains—all split across separate bank accounts.
What are the 5 Profit First accounts for a therapy practice?
Income (all revenue lands here), Profit (a percentage saved before expenses), Owner's Compensation (your salary), Taxes (set aside through the year), and Operating Expenses (rent, utilities, software). Group practices often add a separate payroll account.
What profit percentage should a therapist start with?
There's no single right number, and it's fine to start small. Many owners begin with about 1% toward profit and increase it over time; a solo practice might work toward a higher profit target than a group practice, whose payroll takes a larger share. Set your target allocation percentages to fit your own cash flow.
What's the best bank for a Profit First therapy practice?
You want a bank that lets you open multiple checking accounts without monthly maintenance fees and supports percentage-based transfers between them. Relay is built for this—it's the official banking platform for Profit First, with up to 20 checking accounts and automated percentage-based transfers.
