Pretty much everything I post is blindingly obvious but then it is the obvious stuff which often is either overlooked as being too easy or simply forgotten in the quest for more advanced or avant garde techniques.
My friends company recently went bust. They were making good money and had good cashflow. They were actually a firm of business coaches and if you were their client, the first lesson they taught was saving for your tax bill. Guess what happened to them?You got it right. They were given their quarterly tax bill and couldn’t pay it. This coincided with a drop in revenue and they were closed down owing tens of thousands in unpaid tax bills! It was a great pity because many of them had invested most of their own money into the firm. Some had taken out loans or re-mortgaged to buy in. There was also the loss of about six jobs and the after effects of that.
It was so easily avoided. I never saved for my quarterly business tax bills either but one thing I did was to keep all my PayPal income in my PayPal account. It just so happened that ever quarter it was pretty much enough to pay my tax bill.
It is imperative that every business owner or self employed person saves up a percentage of their income for the tax man. I would save you from the pain and stress of having to find an extra 25% income for the end of the month to pay a tax bill you knew was coming three months ago.
If a firm of business coaches can make this mistake then anybody can.