Cash Flow Clarity for Chiros- How Profit First Works (Step-By-Step)

Profit First for Chiropractors: How to Build a Practice That Pays You Well and Runs Smoothly

If you’ve ever logged into your business bank account and made decisions based solely on whatever number appeared on the screen—welcome to what we call bank balance accounting. It’s the most common way chiropractors manage their money… and also the most stressful.

You might see $50,000 sitting there and feel confident. Or you might see $15,000 and immediately worry about whether there’s enough for payroll, rent, taxes, or your own pay. Either way, decisions are made based on a single number that tells you nothing about what that money is actually for.

Scenario One: The Bank Balance Trap

Most chiropractors operate here—everything in one pot. You check your balance, make a few payments, pay yourself something that “feels right,” and hope it all works out. This approach relies on instinct and emotion rather than structure and strategy. It works… until it doesn’t.

Scenario Two: The Dashboard Approach

Now imagine logging in and seeing multiple accounts, each clearly labeled and serving a specific purpose:

• Owner’s Compensation – your personal paycheck.
• Operating Expenses (OPEX) – for overhead, staff, and credit card payments.
• Taxes – so tax time isn’t a surprise.
• Profit – your reward for taking the risk of ownership.
• Vault – a long-term emergency fund or reserve account.
• Income – where all collections land before being allocated.

This is what we call the dashboard view. You can still check your bank balances (because let’s face it, that’s a hard habit to break), but now those balances actually tell you something useful. You’ll know what’s available for expenses, what’s reserved for taxes, and what you can confidently pay yourself.

Why Profit First Works

The Profit First system, created by Mike Michalowicz, takes the old accounting formula—
Sales – Expenses = Profit—and flips it:
Sales – Profit = Expenses.

You take your profit first and run your business on what’s left. It’s a simple shift in mindset, but a powerful one. It ensures you prioritize your pay and your profit rather than hoping there’s something left at the end of the month.

Think of it as the modern version of the “envelope system.” Instead of managing your business from one big pile of money, you use smaller “plates” (or accounts) that give every dollar a job.

The Behavioral Advantage

This isn’t just accounting—it’s psychology. Even if you could do all this on a spreadsheet, your behavior won’t change until your environment does. Seeing your cash physically separated into purpose-based accounts reinforces discipline.

It gives you immediate feedback. If your expense account runs short, it’s a signal you’re overspending. If your owner’s compensation or profit account grows steadily, you’re running a healthy business.

Contrast that with waiting for your accountant to tell you—months after year-end—that you overspent. By then, it’s too late to course-correct.

Paying Yourself What You Deserve

Profit First also forces you to recognize two distinct rewards for owning your practice:

1. Your salary – for the clinical work you perform.
2. Your profit – for the risk you take as the owner.

Even if your business is new and your margins are tight, start small—allocate 1% of your collections to profit. The habit is more important than the amount. Over time, you’ll build momentum and confidence.

The Six Accounts You Need

1. Income: All collections flow in here first.
2. Profit: Your reward for ownership—start small, even 1%.
3. Owner’s Compensation: Your personal income, ideally paid consistently.
4. Operating Expenses (OPEX): Covers rent, payroll (not yours), supplies, and overhead.
5. Taxes: To eliminate tax-time stress.
6. Vault: A reserve or emergency fund for stability.

Yes, six accounts sound like a lot—but it’s the structure that builds clarity. Most banks allow you to label accounts, so you can create your own dashboard in online banking.

Example Allocation Strategy

While every practice is different, here’s an example of what an allocation plan could look like.

• Operating Expenses: 45%
• Owner’s Compensation: 40%
• Profit: 5%
• Taxes: 5%
• Vault: 5%

A quick (important) note on customization

We spend a significant amount of time on this with clients early in our process. We do not recommend lifting an allocation plan straight from this article—or even directly from Profit First by Mike Michalowicz. Getting your percentages right requires a careful review of your practice’s financials, a clear understanding of tax obligations in your province/country, and alignment with your personal income needs and goals.

And it’s not “set and forget.” Your allocation strategy should be reviewed regularly and adjusted as your practice evolves—paying down debt, hiring staff, changing fee schedules, seasonality, growth spurts, and tax changes can all justify small (but meaningful) tweaks.

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The Rhythm of Allocations

Pick a consistent allocation schedule—maybe the 10th and 25th of each month. On those days, move funds from your income account to the others based on your percentages. Over time, your accounts begin to build up reserves.

After a year or two of consistent allocations, you’ll find yourself with:

• Three months of operating expenses set aside.
• Three months of your own salary saved up.
• A healthy profit and vault balance.

That’s real financial stability—and peace of mind.

Where to Start

If you’re ready to make a change, start small:

• Option 1: Open a new account called Profit and transfer 1% of every deposit.
• Option 2: If taxes stress you out, open a Tax account and move 5% of collections there.

Even these baby steps will shift your mindset from reactive to proactive.

The Bigger Picture

At Align Wealth, this is where every chiropractor’s financial plan begins—with a strong foundation in cash flow. It’s the engine that fuels every other part of your financial life: your income, savings, investments, and lifestyle.

When your practice runs smoothly, everything else starts to fall into place.

Ready to see how your cash flow system stacks up?
Take our Financial CLARITY Assessment to find out where your practice is strong—and where there’s room to improve.
It’s quick, insightful, and could be the first step toward finally feeling in control of your finances.