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If you're dreading tax season or terrified of a surprise bill, you're not alone.
In fact, most small business owners don’t know what they owe until it’s too late—and that’s exactly what we’re here to fix.
Whether you’re just starting out or you’ve been in business for years, learning how to stay on top of your taxes is one of the most powerful moves you can make. And the good news? It’s not about becoming a tax expert. It’s about knowing five key numbers, setting up the right systems, and working with people who understand your business.
Let’s break it down.
✅ The 5 Numbers Every Small Business Owner Needs to Know
Tracking these five numbers gives you clarity, reduces stress, and puts you in control of your tax obligations year-round:
1. Revenue
This is the total income your business generates—think of it as your gross sales. If you have multiple income streams (services, products, B2B sales), break them down and visualize them like a pie chart. This will help you better understand which parts of your business are most profitable.
2. Your Salary
For many small business owners—especially single-member LLCs—your “salary” is actually a draw and isn’t considered a business expense. That means it doesn’t reduce your taxable income. It’s critical to work with your bookkeeper or CPA to make sure you’re paying yourself correctly and understand how your take-home pay impacts your tax picture.
📺 Want help paying yourself consistently? Watch this video → How to Pay Yourself a Consistent Salary
3. Expenses
These are the costs of running your business. Properly categorizing and tracking your expenses ensures you’re taking all eligible deductions and not leaving money on the table.
4. Net Income
This is your profit—revenue minus expenses. It’s the number the IRS cares about when it comes to taxes, so it’s important to track it monthly, not just at year-end.
5. Taxes
Your estimated tax obligations. A good rule of thumb is to set aside 30–40% of your net income into a dedicated tax savings account every month.
🚨 Why It Matters: Insights from FlowFi’s “Tax Trap” Article
Our friends at FlowFi highlight three tax pitfalls that small business owners often fall into:
❌ Self-Employment Tax Surprises
Unlike W-2 employees, business owners pay the full 15.3% self-employment tax on their earnings. If your net income is $120,000, that’s an additional ~$18,000 you need to plan for.
❌ Missed Deductions
From home office costs to software subscriptions, many expenses go undocumented. Without a system in place, you're likely overpaying.
❌ The Wrong Business Structure
LLC owners who don’t evaluate an S-Corp election could be missing out on major savings. Having the right structure can reduce your self-employment tax burden and streamline your compensation.
🛠️ How to Make Tax Season Less Stressful (and More Predictable)
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Open a Dedicated Tax Savings Account
Transfer 30–40% of your monthly net income. Not only will you be ready come tax season, but you’ll also build savings if your tax bill ends up lower than expected. -
Keep Business and Personal Finances Separate
Make sure your business bank accounts reflect all activity so your bookkeeper has a clear picture. -
Work with the Right Professionals
Don’t settle for a generic accountant. You want someone who understands your industry and can advise on strategies tailored to your business model. -
Use The Small Business Planner
This guidebook helps you track revenue, salary, expenses, taxes, and financial goals all in one place—every week, month, and quarter. It’s designed to help you take control of your business finances without overwhelm.
A few final thoughts...
You deserve to feel confident about your taxes. Mastering these five numbers—and building habits around them—is the first step toward a more stable, profitable business. Whether you're looking to avoid surprises or finally pay yourself consistently, it starts here.
Ready to simplify your business finances?
Grab your copy of The Small Business Planner here → Shop The Small Business Planner