Dave Says: Budgeting for Taxes

Reader Question: I recently started my own business, and I know I’m supposed to pay taxes quarterly. How do I budget for those, and how much do I save?

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    When you take that home, set aside 25 percent for your federal, quarterly estimates. In most cases — especially with a small, start-up business — that will put you pretty close to what you’ll need. If you make more than $60,000 to $70,000 in profits, however, you may want to kick that percentage up a little bit. It’s always better to save too much than too little.

    You should always establish a separate checking account when you open a business. All your business income, and nothing else, should go directly into that account. Nothing else goes in or out of that account except for business expenses. What you have left, by definition, is profit.

Dave Ramsey

Dave is the author of The New York Times best-selling book Financial Peace. He is also the host of the nationally syndicated The Dave Ramsey Show, and is a regular guest on television. All of his financial counseling is based on biblical truths. You can hear Dave from 9 a.m. to 11 a.m., weekdays, on WLWI 1440 AM or online at www.daveramsey.com. Send your questions to askdave@daveramsey.com. He resides with his wife Sharon and their three children, Denise, Rachel, and Daniel, in Nashville, Tennessee.

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