One of the most common questions we hear from owners is how much they should be setting aside for business taxes. Many of our clients come to us feeling unsure, overwhelmed, or surprised by their tax bill because they were never taught how to plan for it throughout the year. They worked hard, earned good money, and then discovered they owed far more than expected.
Once we walk them through a simple system, they feel more confident and more in control of their finances. You can use the same approach in your business.
The simple starting point with business taxes
Here’s how to actually implement a strategy for managing business taxes that works:
Set aside a percentage of every payment you receive
A common starting point is 15 to 30 percent depending on your income level and business structure. For example, if you bring in $8,000 in a month and save 20 percent, you would set aside $1,600 immediately. This helps you avoid scrambling for a large lump sum at the end of the year.
Make it automatic. The moment money comes in, a portion goes directly to your tax account. Don’t wait until the end of the month or quarter make sure to set it aside immediately.
Why this works: If you wait to save for taxes until later, it’s easy to spend the money on other needs. By setting it aside right away, you eliminate the temptation and build a consistent buffer throughout the year for your business taxes.
Review your financial reports each month so you always know how your income and expenses are trending
Your income probably isn’t the same every month. Some months are stronger than others. That’s normal and exactly why you need to review your numbers regularly. Read this article on how often to look at your business numbers as a business owner.
Look at your income and expenses each month so you always know how your revenue is trending. If your income usually sits around $5,000 but jumps to $12,000 during a busy season, you should increase what you set aside for business taxes in that high-revenue month. This gives you a stronger buffer and keeps you prepared for changes.
Why this works: Adjusting how much you set aside for taxes as your income changes helps you make better decisions during profitable slower months.
Create a separate bank account specifically for tax savings
This is one of the most powerful steps you can take for managing business taxes.
Keep a dedicated bank account for taxes only. Don’t use it for operating expenses, equipment purchases, or anything else. I
Many business owners tell us that before setting up a separate account for taxes, they kept accidentally spending what they intended to save. The temptation was too strong. Once the tax funds were physically separated into a different account, it became much easier to stay disciplined and avoid unexpected shortfalls.
Why this works: Out of sight, out of mind in the best way. A dedicated account creates a psychological and physical barrier that makes it harder to raid those funds for other purposes.
Beyond Compliance
Setting money aside for taxes isn’t just about following the rules. It’s about building something more valuable: stability, predictability, and peace of mind as you grow your business.
When you know you have money set aside for your taxes, you stop dreading April. You stop worrying about where the payment will come from. You stop feeling surprised by your business taxes. Instead, you feel prepared and in control.
That’s the shift every business owner deserves to experience.
Ready to Take Control of Your Business Taxes?
If you would like support in staying organized, keeping your books accurate, and managing your taxes with confidence, book a call with us. At Luli Bookkeeping we’ll help you build a strategy for your taxes that fits your business and gives you peace of mind.
You’ve worked hard for your money. Let’s make sure you keep more of it.
