07/09/2026
๐๐๐๐จ๐ฎ๐ง๐ญ๐๐ง๐ญ'๐ฌ ๐๐ข๐ฉ: ๐๐ซ๐จ๐๐ข๐ญ ๐๐ง๐ ๐๐ซ๐๐ฐ๐ข๐ง๐ ๐ฌ ๐๐ซ๐๐ง'๐ญ ๐ญ๐ก๐ ๐๐๐ฆ๐ ๐๐ก๐ข๐ง๐
Some business owners assume their tax bill is based on how much money they've taken out of the business.
In reality, tax is based on **profit** โ not on what you've drawn.
Here's the difference:
๐ Profit = income minus expenses
๐ธ Drawings = money you take out for yourself
Example: your business earns $100,000 and has $60,000 in expenses. Profit is $40,000.
Whether you draw $20,000 or $50,000 out of the business, that profit figure doesn't move. The tax bill is based on the $40,000, regardless of how much cash you've actually taken.
This is why tax time can sometimes come as a surprise. The cash may have already been spent, but the tax on the profit is still payable.
โ
๐๐ก๐ ๐๐ข๐ฑ ๐๐ง๐ ๐ ๐ฌ๐ข๐ฆ๐ฉ๐ฅ๐ ๐ฐ๐๐ฒ ๐ญ๐จ ๐๐ฏ๐จ๐ข๐ ๐ญ๐ก๐ ๐ฌ๐ญ๐ซ๐๐ฌ๐ฌ: set aside a portion of your profit for tax throughout the year, rather than trying to find the money when the bill arrives.
Not sure how much you should be putting aside? We'd be happy to help. A quick conversation now can save a lot of headaches later, and help you stay on top of your tax obligations with confidence.
