Episode 679 – How to Plan for Profit and Taxes in your Cleaning Company
What is the proper percentage to withhold for taxes in our cleaning business?
There are two parts to your question here.
- How is your company incorporated?
- Do you have other income?
- What kind of retirement plans do you have in place?
- What is your income this year compared to last year?
- What you expect it to be next year.
- How old you are.
- What are your goals financially at this point?
Now let’s talk about the other part of this question, which is PROFIT. Basically, there’s profit and then after that, you have to get with your tax person for more help, but what we do is we divide the profit up between “Team Brown” (the business owner) and “Team America” (the government). On our program, we coach 50 30 20 breakdowns:
- 50% of your revenue should be the cost of goods sold. If you’ve got $10,000 a month in revenue 5000 should go to the cost of goods sold.
- 30% for overhead which is all expenses not cost of goods sold, marketing, professional development, lawyers, all the kind of stuff that we’re talking about that’s not physically doing the cleaning or providing the service or product that you sell 30% would be the cost of goods sold and cleaning.
- 20% would be profit.
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