Saving for Taxes: an Essential Guide for your Business

Have you ever had a surprise tax bill at the end of the year? What happens when you don't have the money to pay it? We do not want small business owners to get into this scary situation. What is the solution to avoid this? Start a tax savings account, and save money every month for your taxes!

This video shows you how to think about your tax liability, how to calculate your potential tax liability, and how to effectively use a tax savings account.

This video includes:
0:00 Common problem for business owners
1:25 Modern banking solution
2:14 The tax conundrum
2:40 Profit importance
3:30 Flow-through entity taxes
4:46 Different from Profit First
6:20 Profit First tax savings problem
7:17 Clara CFO tax savings solution
9:30 Real financials example
9:50 Net Income and tax calculation
12:25 Transfer money in Relay
13:25 Transfer every month - examples
15:00 Practical steps for tax savings
16:00 Paying quarterly estimated taxes



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Disclaimer: This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.

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[annarossi]

If you're an S Corp what account pays the taxes? An equity account?

[billyhofacker]

Thanks for the great video. Quick question. For a biz filing as an S-Corp and you have a good idea what profit should be for the year, is it OK to increase the payroll withholding for the owner to stay ahead of things? Would that be kind of like this but just more frequent tax payments rather than transferring the amounts. I realize I’d lose out on any interest from keeping it in savings. Thanks for any insight!

[sylvisk]

Thank you for making this video. What would this money transfer look like in quick books? And once the taxes were paid and there was left over in the "tax savings account", would that just stay there? I'm just curious about the back end logistics...recoding it properly in QB. Thanks so much!

[CathyHeilig-vo]

Is that 25% considering the self employment tax that will need to be paid at the end of the year?

[bojanazujovic]

Hi Hannah, thank you for useful video. I am wondering if business owner is obliged to pay estimated quarterly taxes to IRS? Can the owner skip those in case of cash struggling through out the year and pay final tax bill beginning of next year for previous year?

[Viviko]

Wait… why would you take money out without considering taxes?

I have always had a system where the amount from each sale that goes into taxes is automatically allocated into a tax account….