Episode 679 – How to Plan for Profit and Taxes in your Cleaning Company
Today we have Ronald and Samayyah Brown on the podcast. They are the owners of Joyful Haven Cleaning, which was established in August 2019 in Tacoma, Washington, they serve both residential and commercial clients. Today we’re going to talk about their big questions for me which is:
What is the proper percentage to withhold for taxes in our cleaning business?
There are two parts to your question here.
The first part is a TAX question, which has to do with your personal situation:
- 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.
Mike’s Advice
Find a specific tax professional in your area, or at least one that knows the laws of your state. If you’re in the United States,you’ve got federal taxes, which any CPA global or in the United States can help you with as long as they’re licensed to do taxes in the United States. Depending on the state you live in, there’s usually state taxes, and oftentimes, there’s local taxes. So you just need a professional accountant that can really look at your situation.
If you loved this podcast and want more FREE information on how to run your cleaning business, head to www.growmycleaningcompany.com for the FREE webinar or www.growmycleaningcompany.com/talk to speak with one of our coaches.
Don’t forget to rate and subscribe to get notifications for our upcoming podcasts!