Tax
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Set aside tax as you earn, not when the bill arrives
The most stressful tax bill is the one you didn’t plan for. One habit makes it a non-event.
Daniel Lowe,
Founding partner
Tax bills usually arrive months after the income they relate to, when that money has long been spent. That gap is where most of the stress comes from.
The fix is a habit, not a calculation. Every time a customer pays you, move a fixed percentage into a separate savings account and leave it there.
The right percentage depends on your profit, your type of company and where you’re based, so ask your accountant rather than guess. Once you have it, write it down and stick to it.
VAT is the easiest one to get wrong, because it was never your money. If you charge VAT, move it out on the day you’re paid.
Each quarter, compare the balance with your estimated bill. If there’s more than enough, you’ve built a buffer. If there isn’t, you’ve found out early enough to do something about it.