How to Plan for Taxes Even if Your Income Changes Every Month

How to Plan for Taxes Even if Your Income Changes Every Month

A flexible system to stay tax-ready, no matter how unpredictable your business is

If your business income is inconsistent — some months booming, others quiet — tax planning can feel impossible. But even if your revenue fluctuates, the IRS still expects you to pay estimated taxes on time and in full.

The good news is you don’t need a crystal ball to stay ahead of your taxes. You just need a flexible, percentage-based system that adjusts with your income.

Here’s how to confidently plan for taxes, even with variable monthly revenue.

Step 1: Set a Consistent Tax Percentage

The simplest and most effective method is to save a set percentage of your net income every time your business gets paid. A good starting point is 25–30% of your net profit — that’s your income after business expenses.

For example:

  • You make $5,000 this month and spend $1,000 on expenses

  • Your net profit is $4,000

  • Save 25% of $4,000 = $1,000 into your tax savings account

This method flexes with your income. If you have a low month, you save less. If you have a big month, you save more.

Step 2: Open a Dedicated Tax Account

Instead of letting tax money sit in your main business account (where it's likely to get spent), move it immediately into a separate tax savings account. Every time your business earns money:

  1. Deposit revenue into your Income Account

  2. Transfer your tax percentage (25–30%) to your Tax Account

  3. Allocate the rest to Business Expenses and Owner Pay

This account-based method is core to The Small Business Planner and makes tax time far less stressful.

Step 3: Use a Monthly Tax Check-In

At the end of each month, sit down with your planner and ask:

  • What was my total revenue?

  • What were my total expenses?

  • What’s my net income for the month?

  • Did I save at least 25–30% of that number for taxes?

If you had a particularly profitable month and forgot to transfer your tax savings, you can catch up now. If you’re short, note it and adjust in the next high-revenue period.

Step 4: Pay Quarterly Based on the Past Three Months

When it's time to make your quarterly estimated tax payment, calculate your total net income from the last three months and apply your tax percentage.

If you earned:

  • April: $4,000 net

  • May: $2,500 net

  • June: $3,500 net
    Your quarterly income = $10,000
    Save and pay 25% = $2,500 to the IRS

This rolling calculation method works well for businesses with seasonal or unpredictable income.

Step 5: Check In with a Pro Annually

At least once a year, ideally before Q4, meet with a CPA or tax advisor to:

  • Review your income and expenses

  • Adjust your estimated payments if needed

  • Discuss entity structure (e.g., whether to become an S Corp)

  • Plan for deductions and retirement contributions

Even if you don’t need year-round help, a single check-in can save you thousands in taxes and penalties.

Final Takeaway

You don’t need consistent income to stay on top of your taxes — you need a consistent system. By setting aside a percentage of profit, using separate accounts, and checking in monthly, you’ll avoid surprises and build confidence with your money.

The Small Business Planner includes all the tools and templates you need to create this rhythm — so you can focus on growing your business, not dreading tax season.

Explore The Small Business Planner now → https://smallbusinessplanner.com/products/planner

 

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