Matt’s Money System

Over the years I’ve worked as a CPA, I’ve tested and reviewed many different systems for owning a profitable business that supports your personal financial independence. I’ve also seen (and experienced) burnout, paper profits, and those that justify a business that provides little to no economic benefit because they hate taxes. 

This blog post is for those who want their business to provide them with the cash required to live their ideal lifestyle. Simple. 

Who is the Matt Money System for? 

This system is for business owners with less than $1 Million in Revenue, in the United States, who operate as a sole proprietor, single-member LLC, or a single-member LLC who has elected S-Corporation tax status (for those with higher taxable profits). 

Under this system you will NOT need a CPA, lawyer, or financial advisor. Instead, stick to low-priced or free online tools that get the job done, and focus your energy and funds on making your business what you want it to be! The advisors will still be there when you actually need them. 

You’ll start with the revenue (sell a product or perform a service) and work all the way down to personal expenses (groceries, vacation, etc). The system uses modern financial tools available to us in 2025 like having multiple bank accounts, free or low-cost tax filing software, and index funds. 

Your business will be profitable and have enough money for taxes at any level of sales. You and your family will have a well-funded emergency fund, be debt free, and achieve financial independence. 

Business Flow

You’ll want to have your 5 business bank accounts with a bank that allows you to easily set up multiple accounts and freely transfer the money between them through the app. The accounts you’ll need will be named: 

Revenue - Receives cash from customers.

Operating - Includes owner’s salary, your team’s salaries, payroll taxes, and all other general business expenses (Advertising, Insurance, Rent, Software, Supplies, Utilities, Etc.)

Prepaid Expenses - This account should be a High-Yield Savings Account (HYSA) and will accumulate 1/12 of any operating expenses you pay for annually. 

Profit - This account should be a HYSA and will accumulate profits. 50% of this will be distributed to the owner(s) quarterly. 

Tax - This account should be a HYSA and will accumulate taxes. This account should always be 15% of revenue. 

The flow of cash will go from the revenue account into each bank account based on a predetermined percentage. We are going to stick to the basics here and ignore seasonality, credit cards, debt, and bookkeeping for now.

Getting to that allocation percentage is easier than you may think. What we want to do is to come up with an ideal allocation percentage. How much would you ideally pay yourself as the owner? How much passive income should your business provide? 

Next, we need to look at how your business has performed for the last two quarters (or 1 year if you experience a lot of seasonality). Based on where we are now, we will take a baby step towards the ideal allocation percentage. 

Business Flow Example

For example, ABC LLC has determined that based on their last two quarters, they have been operating at a loss, been unprepared for taxes, and have no plan to pay a $3,000 bill coming up for a valuable piece of software that they use. 

They have also decided that to live their desired lifestyle and continue providing value to their customers, they would like to operate at a 15% Profit margin, save 15% for Taxes, and allocate 70% to Operations (including a salary at fair market value for their owner). 

The first step towards those targets will be to start with manageable allocation percentages in that direction. Here is what they have decided to implement for the current quarter: 

Revenue - Receives cash from customers. They are expecting about $50,000 this quarter. 

Operating - 84% Including $250 to the “Prepaid Expenses” account for their $3,000 software bill coming up, and a salary of $12,500 for the owner this quarter ($50,000 annualized). 84% x $50,000 = $42,000

Prepaid Expenses - $250 (from Operating)

Profit - 1% This will prove that the system can make them profitable and move towards the desired results. 1% x $50,000 = $500.

Taxes - 15% So that they are prepared to pay federal, state, and local taxes (business & personal) as they become more profitable. 15% x $50,000 = $7,500

Less is more! Don’t create any more than these 5 bank accounts. More complication leads to cheating. The easier the system, the more likely you are to follow it!  

Timing of Transfers

I understand that most business owners are not as obsessed with accounting and budgets the way I am. (Yes, I check all of my bank accounts and budgets everyday.)

You will not need to be this way. The revenue allocations can be done just twice per month on the 10th and 25th. 

If you are required to run payroll, you’ll also need to do that on these two days. 

Personal Flow

Now that you are being paid a salary and a quarterly distribution, it is time to get your personal finances in line! 

If you are a sole proprietor or single-member LLC, your “salary” and “Profit distributions” will look the same. Simply transfer the salary amount from your business Operating account to your personal Income account on the 10th and 25th. The “Profit distributions” will be a transfer to your Income account quarterly.

If you are an S Corporation, your “salary” will be paid through periodic payroll runs. I recommend using Gusto for keeping payroll on autopilot, and you should pay yourself bi-monthly. The net pay, after taxes which Gusto will automate for you, should be deposited into your personal Income account on pay day. The “Profit distributions” will still be a transfer to your Income account quarterly.  

You will need 5 more bank accounts for your personal finances. The accounts you’ll need will be named: 

Income - Receives owner salary and Profit distributions (plus any other income you or your family earns).

Financial Freedom - This will be money you use to build an emergency fund, pay off debt, invest in a retirement plan such as a Roth IRA, and grow your net worth through stocks, real estate, or business ownership. 

Needs - This will be money used for rent/mortgage, utilities, groceries, transportation, clothing, insurance, health care, hygiene, child care, education, supplies, etc.

Wants - This money will be used for eating out, luxury brand clothing and accessories, entertainment (most subscriptions), travel and vacation, gifts (for yourself and others), luxury transportation (the sports car), etc.

Prepaid Expenses - This will be a HYSA where you store money from the wants and needs accounts on a monthly basis since the expenses come in a lump sum (usually annually, bi-annually, or quarterly). Be careful to keep this account in line with the allocated percentage for needs and wants on a monthly basis. 

The biggest pushback I receive now that we are getting personal is that the system requires you to save money before you pay for your needs. This is the most important part of the system! 

If saving becomes something you do at the end of the month if there is any money “left” then it is not a priority and you’ll be lucky to come up with anything to save or invest. This system teaches you to pay your future self first by starting small, and slowly increasing your savings rate until you get to your ideal percentages. 

Additionally, some will push back that there is not a “giving” category. We are always told to give 10% of your income. I disagree. I think that when you are learning to be financially responsible, you should give your TIME. You can make a massive impact on your community by volunteering at church, coaching a youth team, working at a homeless shelter, participating in special olympics, and so many more things (let your interests guide you). Later when you are financially independent, give as much of your income as you like! Just get out of debt and build some wealth first.

Profit Distribution

The profit distribution will accumulate in a HYSA owned by your business. Once the quarter ends, it is time to celebrate! You will distribute 50% of the balance in the account to your personal Income account. 

This cash should not be allocated or become a part of your monthly budget. You have full autonomy over how these funds are used. For some just getting started, this may be nothing more than a Chipotle bowl with guacamole to celebrate your first profits. For those with higher profits this may be a vacation or some other bigger reward, depending on what is distributed. Whatever you do, make it something that keeps you motivated to continue growing and improving your business. 

In practice, I’ve found that my ambitions with the quarterly distributions are always more on the fun side, but then when I actually receive the money I lean towards the investing side. Maybe that will change one day, but so far I have invested most of my distributions into future passive income streams to allow my future self less reliance on clocking in.

Personal Flow Example

ABC (the owner of ABC LLC) receives their $4,167 per month salary ($12,500 quarterly or $50,000 annually). They allocate their funds with the goal of saving money for the first time since starting their business. They use a 1% savings rate, a 65% needs rate, and a 34% wants rate.

Savings - 1% = $42

Needs - 65% = $2,709

Wants - 34% = $1,417

Prepaid Expenses - Annual car taxes are $300 per year, the annual costco membership that saves them money on groceries and gas is $120 per year, and they want to take a short trip to the beach this year and hope to have $1,200 saved for the trip. Therefore, they will move $25 (car taxes) and $10 (Costco) from the needs budget, and $100 (beach vacation) from their wants budget to their HYSA.

These numbers are not huge, and the percentages may change based on circumstances, but here you can see they are living a healthy lifestyle and taking steps in the right direction on creating surplus cash at the end of the month to build an emergency fund, pay off debt, save for retirement, and/or invest for financial independence.

Hiring Professionals

Let me be clear, there is a point where things get more complicated and you will need to engage CPAs, lawyers, and financial advisors. However, a good CPA, lawyer, or financial advisor should charge a significant fee for their expertise. 

Therefore, if you do not have any profits, you are just getting started, or your business is not complex then their fees should not be a part of your budget. 

Looking for more on this? 

If this blog post resonates with you, or you’d like coaching on the Matt Money System, comment under our post or DM @realbookscpa on Instagram!