Do you own a small business? How can you determine your small business tax percentage?<\/p>\n\n\n\n
In his book Profit First<\/em>, Mike Michalowicz provides three methods for determining your ideal tax percentage as a small business owner. The tax percentage should not only cover your business taxes but your personal taxes as well.<\/p>\n\n\n\n Here’s an overview of the three methods.<\/p>\n\n\n\n\n\n\n\n Michalowicz emphasizes that your small business tax percentage should be enough to cover both your business\u2019s taxes and your personal income taxes. <\/strong>Paying your personal taxes with your business\u2019s money, he says, is part of the financial freedom that all business owners want. Michalowicz provides three methods for determining your ideal tax percentage, all of which are relatively simple. <\/p>\n\n\n\n Add the amount paid on your business and personal taxes together, then divide that number by your adjusted revenue. Do this using documents from the last three years to get an idea of your ideal tax allocation percentage. <\/p>\n\n\n\n Alternatively, an accountant can calculate your year-to-date personal and business tax liability, which you can add together then divide by your year-to-date adjusted revenue. <\/p>\n\n\n\n Finally, you can also add your personal income and your business\u2019s profits together, then multiply that number by the tax rate of someone in your income bracket. Then, divide that number by your adjusted revenue to get a rough estimate of your ideal tax allocation percentage. <\/p>\n\n\n\nFinding Your Ideal Tax Percentage<\/strong><\/h2>\n\n\n\n
1. Use Past Tax Records<\/strong><\/h3>\n\n\n\n
2. Use Current Tax Liability<\/strong><\/h3>\n\n\n\n
3. Use Your Taxable Income<\/strong><\/h3>\n\n\n\n