I bang on about this a lot – putting money away into a separate business bank account for your ATO liabilities. Today I need to put this front and centre AGAIN!
I was working on a client’s BAS this morning and the end result of their liability was pretty hefty. Yes, they’ve made some GOOD money this quarter – best ever in the 2 years they’ve been in business. They’ve been heeding my advice around getting invoices out quickly (and charging our correctly!), ensuring their clients pay them in a timely manner, AND giving their accounts payable closer attention.
HOWEVER, despite me encouraging them to put money aside each month (one partner is always totally puzzled as to why they shouldn’t just leave it all in their main bank account………..), they have continued to ignore my suggestions and this BAS is going to STING A LOT because they don’t have the money to pay their BAS.
So – how much money SHOULD you put aside?
Here’s a general rule of thumb:
10% for GST (on your gross income)
30% for end of year tax
= 40% to start! Every. single. month.
If you have payroll, you should put the following away every. single. month:
PAYGWH (i.e. tax in payroll for your employees)
Super (10%)
NOTE: super is increasing to 10.5% as at 1st July for all employees (the threshhold of earning $450 gross per month before super starts accruing WILL NO LONGER EXIST) Have you got that in your upcoming budget?
There should never be ANY surprises at the end of the quarter – you should be regularly looking at (and more importantly UNDERSTANDING) your numbers.
You should know how much money to put in a separate BUSINESS account at the end of every single month.
I know an AWESOME bookkeeper who loves nothing better than making it easy for you to understand (I know one if you’re interested!)
If you don’t understand your business numbers, I urge you to talk to someone who does! Be business savvy!
Supporting you in your business success
Karen Whitely
Educating & empowering small business for long term profitability
61 482 080 430