Have you ever wrapped up a big job, looked at your bank account, and thought:

“Where the heck did it all go?”

You’re not alone.
Most contractors are running million-dollar crews on $50 cash flow—and it’s exhausting.

If you’re a:

• General contractor

• Small GC or handyman

• HVAC, electrical, or plumbing company

…and your bank balance feels like a yo-yo, this is your blueprint for setting up Profit First the contractor way.

You’ll learn:

• Which bank accounts to open

• What percentages to start with

• What to do this week to get your cash under control

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The Simple Shift: Profit First in Plain English

Traditional accounting:

Sales – Expenses = Profit

Profit First flips it:

Sales – Profit = Expenses

You decide up front:

• How much profit you keep

• How much you pay yourself

• How much goes toward taxes

Then your business has to learn to run on what’s left.

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The “Envelope System” for Your Business

Think of Profit First like the old envelope system for personal budgeting—just with bank accounts:

Instead of one big pot of money, you intentionally split cash into different “envelopes” (accounts) so you can see what’s truly available.

At a minimum, you’ll use:

1. Income – all money lands here first

2. Profit – your reward for owning the business

3. Owner’s Pay – your paycheck for working in the business

4. Tax – for Uncle Sam, so tax time doesn’t wreck you

5. Operating Expenses (OPEX) – what’s left to run the business

For contractors, we add one more key concept: real revenue.

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The Contractor Twist: Real Revenue vs. Fake Rich

If you’ve ever felt rich until the vendor bills hit, here’s why:

A big chunk of your deposits are:

• Materials

• Subcontractors

You don’t really earn that money—it just passes through you.

So we focus on:

Real Revenue = Total Income – Materials & Subcontractors

Your Profit, Owner’s Pay, Tax, and OPEX percentages are all based on real revenue, not gross.

This one shift fixes most of the cash chaos I see in contractor businesses.

You can also set up a separate Materials & Subs account so those dollars never mix with OPEX.

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The Core Accounts (Plus Optional Buffers)

Here’s the basic structure:

• Income – money comes in, no bills paid from here

• Materials & Subs (optional) – holds job costs so they don’t inflate your “spendable” balance

• Profit – even starting with 1% matters

• Owner’s Pay – your regular paycheck

• Tax – a % of real revenue every allocation day

• OPEX – everything left after the above

Optional contractor accounts:

• Payroll account – if you pay weekly

• Buffer / drip account – for slow seasons

• Building / equipment fund – for future tools, trucks, or office space

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Starter Target Percentages for Small Contractors

We talk about two sets of percentages:

• TAPs = Target Allocation Percentages (where you want to be)

• CAPs = Current Allocation Percentages (where you’re starting)

For a contractor under about $1.5M gross, based on real revenue, healthy targets might be:

• Profit: 3–5% (eventually 10% is great)

• Owner’s Pay: 35–45%

• Tax: 10–15%

• OPEX: 30–45%

If you’re not used to paying yourself or taking profit, your starting CAPs might look more like:

• Profit: 1–2%

• Owner’s Pay: 20–30%

• Tax: 10–12%

• OPEX: everything else

Each quarter, you nudge CAPs closer to TAPs by 1–2 points at a time. Slow adjustments work better than big jumps that force you to steal from Profit and Tax just to pay bills.

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How Often to Move the Money

In the Profit First book, the rhythm is:

Twice a month: the 10th and 25th.

On those days you:

1. Look at the Income account

2. Move money into:

   • Profit

   • Owner’s Pay

   • Tax

   • OPEX

   • (and Materials & Subs if using that account)

For contractors, especially service-based trades getting paid often, I like weekly allocations—for example, every Tuesday:

• It becomes a habit

• It keeps OPEX funded for weekly payroll

• You get faster feedback on whether your pricing and spending are working

Pick a schedule that matches your cash cycle—and stick with it.

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Your First 7 Days: Quick Start Plan

Day 1–2: Open the Accounts

Set up:

• Income

• Materials & Subs (optional but recommended)

• Profit

• Owner’s Pay

• Tax

• OPEX

• Optional: payroll or buffer accounts

Savings accounts are perfect for Profit and Tax.

Day 3: Calculate Real Revenue

Pull a P&L for the last 3–6 months:

• Total income

• Minus total materials + subs

• That’s your real revenue

This tells you what you truly have to work with.

Day 4: Set Starter Percentages

Choose realistic starting percentages, for example:

• Profit: 1–2%

• Owner’s Pay: 25–30%

• Tax: 10–12%

• OPEX: remainder

The key is to start now, even if the dollar amounts are small.

Day 5: Redirect Your Bills

Update your automations:

• Vendor bills for materials & subs → Materials & Subs account

• Recurring overhead bills → OPEX account

Most contractors keep their existing checking as OPEX and open a new Income account, then update Stripe/CRM deposits to flow into Income.

Day 6: Do Your First Allocation

Whatever’s in Income:

• Move your starter percentages into Profit, Owner’s Pay, Tax, OPEX, and M&S

• Celebrate your first intentional profit transfer—even if it’s $20

Day 7: Lock In the Habit

• Add recurring weekly or 10th/25th calendar reminders

• Turn off autopays hitting the wrong account

• Confirm deposits flow into Income

You’ve now put a simple, powerful system in place.

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Common Pitfalls to Watch For

• Using M&S money for overhead
  That’s stealing from jobs and guarantees you’ll always be chasing cash.

• Setting allocations too high too fast
  Start with 1–3% profit and small increases each quarter. Don’t choke the system.

• Underfunding taxes
  If you’re unsure, default to 12–15% of real revenue into your Tax account until we dial it in.

• Ignoring seasonality
  If winter or hunting season slows you down, build a payroll/buffer account now, during the peak months.

Real clients with seasonal dips—like contractors tied to the housing cycle—have been able to make those slower months manageable by:

• Knowing their monthly nut

• Funding Profit and buffer accounts during busy periods

• Continuing to pay themselves even when work slows

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Next Steps: Get Help Implementing Profit First

You don’t have to figure this out alone between bids, call-outs, and 14-hour days.

As a Certified Profit First Professional, my team and I help contractors:

• Set up the right accounts and percentages

• Build cash flow forecasts

• Dial in job costing

• Plan for taxes, tools, trucks, and long-term growth

Two easy ways to move forward:

1. Book a discovery call
   👉 meetwithsavvy.com

2. Take the “How Profitable Are You?” Quiz
   👉 savvytaxstrategies.com/quiz
   It’s quick, and you’ll get a profitability snapshot plus the core chapters of Profit First in PDF.

If your crew is working hard but your bank account doesn’t reflect it, you don’t have a hustle problem—you have a cash flow system problem.

Profit First gives you a clear, simple way to fix it—one account, one allocation, one week at a time.

Schedule a 30 minute, no cost, no commitment consultation today. Let’s see if it makes sense to work together.