September 24, 2018

075: Proper Accounting for an Online Course Business

1 hour 1 minute

Just about a year ago, fellow course creators Tim Geiss and Nate Dodson were on the podcast with me talking about a book I just finished: Profit First by Mike Michalowicz. It sparked a great discussion about handling some very important aspects of having your own business, and since I’ve now been using the profit first system for a year, I wanted to revisit this topic with you.

"Sales are a vanity metric. They don’t mean anything unless you put them into context."

-Tom Geiss

As evidenced by my continued implementation of what I learned from Profit First, I am a big fan of this way of accounting. It works, and it’s relatively simple to begin using. I hope you enjoy this blast-from-the-past episode – and maybe even consider changing your accounting system as a result. Let’s jump in!

In This Episode, We Talked About:

(1:48) The accounting system I use

(2:54) The underlying concept behind putting profit first and what that means on a practical level for my business

(4:16) A recap from my conversation last year with Nate and Tom about Profit First

(5:10) Tom’s reasons for implementing this accounting method and how he feels it benefits his business

(7:39) How long it took for me to start implementing profit first and how often I initially was revisiting my system

(10:28) The business credit card that all three of us have found useful

(11:46) Why you can still use this system without rigidly following every single guideline

(12:55) Nate’s question about how Profit First actually benefits businesses and my early takeaways

(17:59) The minimum percentage of profit that this system has you start putting aside each month for emergencies

(19:44) How putting profit first helped Tom feel less uptight about spending money on growing his business

(21:36) The way this process allow for a steady personal income and regular bonuses despite monthly profit fluctuations

(25:38) Tax implications for different types of business structures

(26:44) The difference between being an employee and an investor

(29:42) How using the profit first system affects operating expenses

(31:17) A mistake I probably wouldn’t have made if I was using this system earlier

(32:03) The role of a business emergency fund in Profit First context

(35:21) “The Vault” - an advanced profit first technique

(36:12) Why this system keeps profit and tax accounts separate

(38:10) How putting profit first could benefit one of Nate’s other business

(42:23) Moving from the owner-operator role to being an owner working on the business rather than in it

(43:18) A quick look at FICA accounting

(47:14) How the profit first concept works as you initially implement it

(48:36) The percentage of revenue to set aside for taxes and other categories

(52:33) The main point of Profit First

(53:18) A tip from Tom on operating expense decisions

(56:08) The best type of bank accounts for profit first accounting

(57:56) How the profit first concept could work for businesses beside online courses

We discussed all that and much more, so don’t forget to leave a comment and let me know what you enjoyed about today’s flashback episode!

Links

Bonjoro Free Trial

Profit First

Piano in 21 Days

The Online Course Guy

...more

View all episodes

By Jacques Hopkins

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