Profit Routing for Trades & Home Service Owners: The 4‑Bucket Framework That Turns Extra Profit Into Wealth (CPA Explained)

This post is the companion to the video — and it’s built around the tool we made for this exact problem:

Start here: Profit Routing Calculator + Cheat Sheet
(Use it to pick your level, set your percentages, and download the one‑page routing sheet.)

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The quick take

Most owners do one of two things with extra profit:

• Leave it in checking (earning ~0% while inflation eats it)
• Spend it emotionally (truck, equipment, “reward purchases”) — then scramble at payroll

Profit routing fixes that. You’ll split profit into four buckets by percentage, based on your profit level:

1. Tax
2. Reserves
3. Growth
4. Wealth

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First: make sure we mean the same thing by “profit”

Profit is not revenue. Profit is what’s left after every expense is paid.

Revenue − Expenses = Profit (pre‑tax)

Expenses include:

• Payroll + contractors
• Materials
• Insurance
• Rent
• Truck + fuel
• Software
• Everything

If you don’t know your real monthly profit number, that’s not a “small issue.” Routing only works when your numbers are real.

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CFO reality check

You can show profit on paper and still feel broke if:

• Cash is stuck in accounts receivable
• Payroll hits on Friday
• Taxes are behind
• Suppliers are past due

So before you route a dollar, run this 30‑second safety gate.

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The 30‑second safety gate

If any answer is no, fix this first — then route profit.

• Are payroll filings and held taxes current? (sales tax, payroll withholdings — not your money)
• Are you current with suppliers and payment plans?
• Do you have a minimum operating buffer in checking? (at least one payroll + a couple weeks of core bills)

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The Profit Routing Framework

Open four separate bank accounts. Seriously.

• TAX — profit set‑aside for income taxes
• RESERVES — slow season / repairs / “oh crap” fund
• GROWTH — reinvestment that makes you more money
• WEALTH — money that leaves the business and builds your net worth

Every month, profit hits and you split it across these four buckets by percentage.

Tool: The easiest way to set this up is to run your numbers through the Profit Routing Calculator + Cheat Sheet.

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The reserves rule that most owners miss

You’ll see “until target” on reserves.

That means:

• You fund reserves at the listed percent until you hit your reserves goal (in months of overhead)
• Then you drop reserves down to a smaller maintenance percent
• You reroute the freed‑up percent to Wealth by default (or Growth if you’re in a defined 90‑day plan)

Simple reserve maintenance rule (after target is hit):

• Level 1: 10%
• Level 2: 5%
• Level 3: 3%
• Level 4: 2%

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Your routing percentages by profit level

These are the levels used in the calculator and the cheat sheet. Use them as defaults — and adjust with quarterly projections.

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Level 1 — $1,000/month extra profit

Goal: stop chaos and build your first cash buffer.

Default split

• Tax: 25%
• Reserves: 55% (until target)
• Growth: 10%
• Wealth: 10%

Optimized target (with cleanup + planning)

• Tax: 20% *
• Reserves: 55% (until target)
• Growth: 15%
• Wealth: 10%

Reserves target: 1–2 months of overhead.

At this stage, Growth ≠ hiring. Growth is tools and cleanup:

• books cleaned up
• scheduling that doesn’t break your day
• call tracking so you can stop guessing marketing

Wealth is about the habit (automate it), not the amount.

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Level 2 — $10,000/month extra profit

Goal: buy back time, systematize operations, and start building real wealth.

Default split (common when owners are “tax scared”)

• Tax: 30–40%
• Reserves: 20% (until target)
• Growth: ~20–25%
• Wealth: ~20–25%

Optimized target (projection‑based)

• Tax: 20% *
• Reserves: 20% (until target)
• Growth: 30%
• Wealth: 30%

Reserves target: 2–3 months of overhead.

What’s the real dollar impact?
If you drop your tax set‑aside from 35% to 20% on $10,000/month profit, that frees $1,500/month.
That’s $18,000/year redirected into Growth and Wealth — without changing revenue.

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Level 3 — $50,000/month extra profit

Goal: scale without breaking quality, protect what you built, diversify aggressively.

Default split (no proactive planning)

• Tax: 30–40%
• Reserves: 10% (until target)
• Growth: ~23–27%
• Wealth: ~28–33%

Optimized target (projection‑based)

• Tax: 25% *
• Reserves: 10% (until target)
• Growth: 29%
• Wealth: 36%

Reserves target: 3–6 months of overhead.

At this level, your biggest Growth wins are:

• operations leadership (remove you from dispatch/firefighting)
• quality control (callbacks kill profit)
• systems (CRM pipeline, job costing dashboards, A/R discipline)

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Level 4 — $100,000/month extra profit

Goal: protect the empire, allocate like a CFO, plan your exit.

Default split

• Tax: 35–45%
• Reserves: 7% (until target)
• Growth: 15–18% (pick)
• Wealth: the remainder

Optimized target (projection‑based)

• Tax: 20–28% *
• Reserves: 7% (until target)
• Growth: 15–18% (pick)
• Wealth: the remainder

Reserves target: typically 3–6 months (sometimes more depending on payroll size, seasonality, and risk).

At this level, “Wealth” becomes diversification and optionality:

• market investing (diversified, automated)
• real estate (managed, scalable)
• dry powder for acquisitions and opportunities
• higher‑end retirement planning (cash balance / defined benefit — when appropriate)

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The 90‑day Growth rule (don’t spread it thin)

If you’re Level 2+, pick ONE growth lane per quarter.

Choose one:

• Buy back admin time: dispatcher support, answering service, part‑time office help
• Measurable marketing: tracking → calls → booked jobs (not “hope marketing”)
• Close rate upgrades: estimate follow‑up automation, financing options, scripts
• Quality systems: SOPs, checklists, training to reduce callbacks
• Cash discipline: A/R follow‑up cadence and clear payment terms

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Four mistakes that wreck trades owners (even with profit)

1. Buying trucks as a reward before reserves are funded
2. Hiring before you have systems (more expensive chaos)
3. No reserves (seasonality doesn’t care about your optimism)
4. Overpaying taxes because “that’s just what it costs”

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Your monthly checklist

Every month:

• Route profit into the four buckets by percentage
• Check reserves target (and drop to maintenance % once hit)
• Stay in one growth lane per quarter
• Automate wealth investing (so it happens without willpower)
• Review pricing and margins (labor + materials especially)

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Use the calculator (fastest path)

Go here: Profit Routing Calculator + Cheat Sheet

1. Identify your monthly “extra profit” (after expenses, before tax)
2. Choose your level ($1k / $10k / $50k / $100k)
3. Set your reserves target (months of overhead)
4. Get your recommended splits + download the cheat sheet
5. Turn the percentages into automatic transfers

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What to do next

Today: Open the Profit Routing Calculator and download the cheat sheet.
This week: Create the four accounts and set your first automated transfers.
This quarter: Pair routing with projections so your tax bucket is real — not fear‑based.

Want help implementing it?
Book a free strategy session and we’ll help you set your buckets, validate your tax targets with projections, and build a cadence that keeps profit turning into wealth.

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