The Five Checking Accounts
Split your money across five accounts so you never run out.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 4
- Confidence
- 82%
Miller teaches a five-checking-account system for managing business cash so you never run out. Moving money between the accounts by rule ensures you always have enough for taxes, for yourself, and for bills. A dedicated profit account holds five months of overhead, giving you time to 'circle the airport' for months during an emergency before you have to land. He also warns against profit distributions, which don't hit overhead but negatively affect cash flow — better to pay people via commissions tied directly to sales, which increases thrust in the business.
Origin
Miller developed the system running his own company and teaches it in his 'How to Grow a Business' course, having personally regretted using profit distributions.
Core principles
- 01Use exactly five checking accounts and move money between them by rule.
- 02Separate accounts guarantee funds for taxes, yourself, and bills.
- 03The profit account should hold five months of overhead.
- 04A five-month reserve lets you 'circle the airport' during an emergency.
- 05Prefer commissions tied to sales over profit distributions, which drain cash flow.
How to run it
- 1
Open five checking accounts
Create exactly five accounts and move money in and out of them using a fixed system so money is always allocated correctly.
- 2
Reserve for taxes, self, and bills
The system ensures you always have enough for taxes, enough for yourself personally, and enough to pay bills.
- 3
Fund the profit account to five months
Build the profit account until it holds five months of overhead, so an emergency gives you months of runway.
Pro tip Five months lets you circle the airport calmly rather than crash-landing.
- 4
Use commissions, not profit distributions
Instead of profit distributions that drain cash flow, pay people via commissions tied directly to what they sell or help create.
Pro tip This routes money into the sales engine and increases thrust for everyone.
Watch out Profit distributions don't hit overhead but negatively affect cash flow.
In the wild
Miller did profit distributions with a few people and regrets it; he'd instead give the same wealth opportunity through commissions tied to products those people directly sell.
→ Shifting from distributions to sales-linked commissions protects cash flow and increases thrust.
When the host admits she has only two months of reserves, Miller says that's close but she should build to five months of overhead.
→ Establishes five months as the target reserve for weathering emergencies.
Common mistakes
Relying on profit distributions
Distributions negatively affect cash flow, whereas sales-linked commissions channel money into the sales engine and grow the business.
Holding too little reserve
Two months of cash is close but insufficient — without roughly five months you can't calmly ride out an emergency.
Is it for you?
Best for
Small-business owners who need a simple, durable cash-management system.
Not ideal for
Those seeking detailed accounting or tax strategy beyond a cash-flow discipline.
From the transcript
“i tell you why you need five checking accounts and i tell you how to use them”
“in the profit account you want five months worth of overhead and that allows you to circle the airport for five months”
“you have to be very very careful with profit distributions because they negatively affect your cash flow”
From the episode
Donald Miller: 6 Steps to Scale a Profitable Small Business
Donald Miller