FitBiz Basic 2: The Only Certain Things In Life – Taxes and Death.
I’m sure this quote is familiar to you. It was something I was told on a regular basis; that and “money doesn’t grow on trees” (urgh). Since you’re (hopefully) not going to cark it anytime soon the only sure thing is TAX.
If you have a job, regardless of whether you are an employee or sole contractor then doing your yearly taxes is inevitable and just a part of #adulting.
But when you say ‘tax time’ to people it is met in one of two ways – either dread and fear about what needs to be paid OR calm confidence knowing that a fresh new financial year is about to begin.
When I first started my fitness career, my attitude towards tax was “whateves” ??♀️ . I was like “screw you government” – you assholas ???♀️ (remember I was 23, immature and had ZERO fitbiz badassery skills!). I had a terrible mindset about it from day one, and definitely fell into the first camp above.
No-one had taken the time to explain what taxes meant to my business. Of course as a youngin’ I could’ve taken responsibility for that terrible mindset, but it wasn’t until my later years that I realised the significance.
These days I LOVE paying taxes! Want to know why?
Because it shows growth.
It shows that you are earning money! And if you want to have a successful business, not just a cute gym hobby, then you have to do what successful businesses do – provide an epic service, make money, pay taxes, re-invest money back into business and so on.
I’m not a financial advisor nor can I give you specific recommendations for your business. That’s why you need to have an accountant who can give you the best recommendations (based on your business, country and tax laws). However a common percentage is anywhere between 20 – 30% of your income.
So if you earn $100 per week from a client then $20 – $30 belongs to the government. To stay on top of this, transfer money weekly from your business account into a high interest savings account.
Don’t touch this account; it’s not your money anyways.
At the end of the financial year you’ll have a pool of money that will be used for tax and possibly there’ll be extra left over. As mentioned in Why You Must Know Your Numbers, it starts with having intimate knowledge of your finances and adopting healthy financial habits.
Both these books are revolutionary and will help you make sense of your budgeting and how to look at the numbers in your business.
Don’t put off setting aside taxes. You can start this immediately; like as in right now. If you don’t have a high interest bank account set up, go make that happen now, and then schedule in time at the end of each week to do your Financial admin.
Cultivate the habit of removing your tax percentage from each client payment today no matter how many clients you have. Do this consistently, and enjoy sliding into the next tax period with excitement!
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