Your morning is going great until your email pings.
It’s from your accountant: “2024 Tax Returns”
You open it up to see the damage.
You check your bank account balance.
…. F*ck!
Sound familiar? That was my life until I started this simple tax savings system:
Every year we estimate how much we’re getting squeezed on income taxes, real estate property taxes, city/state taxes, and rent override.
Income taxes
I ballpark at Profit x 30%.
= $500k (example)
Real estate taxes
There are 10 locations the business is responsible for paying the annual property taxes directly.
= $250k (example)
City & State Taxes
Philadelphia, Pennsylvania, & New Jersey for me.
= $50k (example)
Rent Override
Franchise-specific issue. Midas charges us additional rent at a few locations based on our sales. We can thank McDonald’s for that idea.
= $150k (example)
In this example, we owe $950k over the next 12 months.
$950k / 52 weeks = $18,250 per week to save.
Every Monday we transfer $18,250 into the “tax savings” bank account.
The money in that account isn’t mine. I’m just holding it for other people. This mindset makes it less painful when those big bills come due.
All tax payments come directly from the tax account — not touching our operating cash.
Once taxes are finalized in April, I will re-calculate for next year.
This system has completely relieved the stress of tax season.
I used to scrape together cash from multiple accounts and pull money out of personal savings to make these payments.
I was worried about making payroll, projecting out sales, and seeing where we could delay other payments.
Now, I don’t even think about it.
The bills are paid with money I’ve already written off.
Sometimes there’s a little cash left over in the tax account that I take as a bonus.
Action Plan
1) Open a new bank account
2) Create a spreadsheet to estimate taxes
3) Setup a weekly recurring transfer
Cheers!
Brian
P.S. Want to learn how other successful franchisees approach tax planning? Inside 8-Figure Franchisee, owners openly share their strategies.
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