I know that there’ll be many reasons why you set up your business, but one of them, and probably the most important, is to make a profit.
And the amount of money you are taking out of your business after tax can be broken down into three different numbers.
So, watch my video or read below to find out more!
As a business owner, there is a lot going on in your life, but you should know these three numbers after corporation and personal tax.
So, what are these figures are you achieving within your business and also what do you need to achieve personally to live the life that you want to and also support your family?
1. Your Safety Number
As the name says, your safety number is the amount of money you need to survive. This includes your mortgage or rent, bills, food and other payments to cover your needs and your family.
So, you should know your safety number to understand how much money you need to take care of all the essentials and live your life.
Everyone’s safety number is different; this depends on what you choose it to be.
So, do you know your safety number? Do you know exactly how much you need to provide the essentials for your family?
Because if your earning is below that number, you will need to have available savings to cover these costs or build up your profit.
2. Nice To earn Number
This number will be your Safety Number plus the added extras, such as holidays, days out, entertainment, and the things that make you enjoy your life.
Do you know what this number is to you?
And again, this is different for everyone, and this has to be right specifically for you. How many holidays do you want to go on? What activities and hobbies do you want to do?
To cover all these, you must first know your Nice To Earn Number.
What is your nice-to-earn number for you as a business owner?
Because in an ideal world, once your business is matured, you should be earning this figure after corporation tax and after your personal tax has been paid every month or annually.
And ideally, you should have enough buffer in your business where you’re building reserves, able to invest in your business, and you’re not taking all the fruit from the tree.
So, as we see it today, within your business, are you close to your safety number, or are you on your nice-to-earn number?
Also, factor in further investments because what you could be looking at later is looking to build your overall wealth. And that can be a combination of your nice-to-earn number that could be leaving some money in your business, and it could be building assets. These could come from a variety of sources, like ISAs, pensions, and property, so that you will have a passive income later on in your life.
If you don’t know this number, then this is the time to sit down and look into your finances to have a clear understanding.
3. Your WOW Number
Everything is in hand; You are earning the best amount of money you could ever make; life is good.
You can get to do what you want, when you want, without any fear of money.
But don’t forget again; this number has to be relevant to you.
Someone’s Wow Number might be £10,000 different from yours! But what truly would make you happy in your heart so that you could have the best time ever with your family? What is that number for you, and is your business earning that for you?
If so, are you able to take that money out of your business after personal and corporation tax without having a black hole in your Director’s Loan Account?
Also, you should factor in any investments for your future to build wealth and more passive income because, ultimately, we don’t want to work forever.
If you have any questions or I can help you in any way, please click the link below and book a free Discovery Call with me. I will take on board any questions you might have without a pushy sales pitch.
