HOW MUCH TO SET ASIDE FOR TAXES IN YOUR BUSINESS

One of the most common questions small business owners ask is:

"How much should I be putting aside for tax?"

Many people start their business without a clear plan for tax savings. As a result, they feel stressed, caught off guard by their tax bill, or unsure how much they should have put away during the year.

The good news is that with a simple, consistent system, tax time doesn't need to be overwhelming. Here are some practical ways to plan ahead and stay in control.

1. Save a percentage of every payment you receive

A simple and effective strategy is to set aside a percentage of each payment as soon as it hits your account.

A common starting range is 15% to 30%, depending on:

• your income level
• your business structure
• your likely tax rate

For example:

If your business receives $8,000 in a month and you decide to save 20%, you would move $1,600 straight into your tax savings.

Doing this consistently means you're building your tax buffer gradually, instead of scrambling to find a lump sum at the end of the year.

2. Review your financial reports every month

Monthly financial reviews help you understand how your income and expenses are changing over time. This is important because your tax position usually changes as your revenue changes.

For instance:

• If your usual monthly income is $5,000, but it jumps to $12,000 during a busy period, your tax bill will likely increase too.
• Increasing your tax savings for those higher-income months gives you a stronger buffer and reduces the chance of being caught short later.

Regularly checking your profit and loss and cash flow reports helps you:

• adjust your tax savings when your income grows
• spot trends early
• avoid relying on guesswork

3. Use a separate bank account for tax savings

One of the simplest ways to protect your tax money is to keep it in its own bank account, separate from your day-to-day business spending.

Without a dedicated tax account, many business owners accidentally dip into funds that were meant for the ATO. Over time, this creates unnecessary stress and cash flow pressure.

By moving your tax savings into a separate account:

• you're less tempted to spend it
• you can see clearly how much you've set aside
• you build discipline around tax planning

Think of this account as money that already belongs to the tax office - you're just holding it safely until it's due.

Tax planning is about more than just compliance

Putting money aside for tax isn't only about meeting your obligations. It's also about:

• creating stability in your business
• making your cash flow more predictable
• reducing stress around lodgement deadlines
• having confidence that you're prepared for your next bill

When you build tax savings into your regular money systems, tax time becomes a routine event - not a shock.

If you'd like help staying organised, keeping your books accurate and planning ahead for tax with confidence, we're here to support you. We can help you put the right structure in place so your business finances feel clear, manageable and under control.