The habit that prevents crises.
THE PROBLEM
Tax is due on money you have already spent.
WHAT TO DO
Set aside a proportion of income as it arrives.
Into a separate account.
WHAT PROPORTION
Ask your accountant what is appropriate for your situation.
WHY A SEPARATE ACCOUNT
Money in your main account is spent.
Money elsewhere is not.
WHEN TO MOVE IT
As income arrives, not at the end of the month.
WHAT NOT TO DO
Treat everything received as yours Rely on having enough when the bill arrives
WHY THAT FAILS
Businesses spend what they can see.
WHAT ELSE TO SET ASIDE
Anything owed to others: staff, suppliers, statutory contributions.
WHAT THAT PREVENTS
The most common cash crisis in small business.
WHAT TO REVIEW
Whether the amount set aside is sufficient, as your income changes.
WHAT TO ASK YOUR ACCOUNTANT
Whether your set-aside is appropriate, at each review.
