How much should a small business set aside for taxes each month?

Key takeaways

• Set aside 25 to 35 percent of net profit each month. Net profit means revenue minus expenses, not the money in the account.

• Move it to a separate account on the day it is calculated, because tax money left in the operating account gets spent.

• Sales tax and payroll withholding are not yours and should never be inside the set-aside percentage. They are held for somebody else.

• Estimated payments are due four times a year, and the IRS rolls a deadline to the next business day when it lands on a weekend.

• The percentages here are budgeting guidance rather than tax rules, and your own figure depends on structure, income and state.

Quick answer

• A working rule is 25 to 35 percent of monthly net profit, moved into a separate account as soon as the month closes.

• Lean toward the lower end when income is modest and the higher end when it is not, or when your state takes a meaningful share.

• Confirm your own rate with whoever prepares your return, because structure changes it more than revenue does.

Most small businesses should put aside 25 to 35 percent of net profit every month. Net profit is what remains after expenses, not what landed in the bank, and the distinction is where the practice usually fails. A business setting aside a share of revenue is either hoarding cash it needs or saving far too little, depending on its margin.

Numetix handles the monthly close that produces this number and runs an AI-powered. Experts in the Loop. model, so we have an interest in the topic. Everything below is budgeting practice rather than tax advice, and the one person who can give you a correct percentage is the one who prepares your return.

Where in the range to sit

These are budgeting bands, not rates. Nobody publishes a verified percentage for this, because the correct number depends on your structure, your total income including anything outside the business, and the state you file in.

The calculation, worked

Take a month with 10,000 dollars of revenue and 4,000 dollars of expenses. Net profit is 6,000 dollars. At 30 percent, the transfer is 1,800 dollars.

Do it on the day the monthly close finishes, not when a payment falls due. The close is the only point at which net profit is actually known, which is why businesses with a late or unreliable close end up guessing at this and guessing low.

The transfer should go to a separate account that is inconvenient to spend from. Not a sub-ledger, not a mental note, a different account. The failure mode is almost never a miscalculation; it is money that was calculated correctly and then used for something else in a tight month.

Money that is not yours and must be kept separate

Two categories get folded into the set-aside and should not be.

Sales tax collected from customers. This was never revenue. You collected it on behalf of a state and you are holding it until you remit it. Counting it inside a profit-based percentage both overstates profit and understates what you owe.

Payroll withholding and the employer share. Amounts withheld from employee pay belong to the employee and the taxing authority from the moment they are deducted. These run on their own schedule and have nothing to do with whether the business was profitable that month.

Track both separately from day one. Businesses that already hold money belonging to others as a matter of course, as they do in property management, treat this separation as a control rather than a reminder, and every business benefits from the same habit. A business that cannot tell you, today, how much of its bank balance is other people's money does not know its own position, which is the point our note on the monthly reports an owner should actually read keeps returning to.

When the money actually leaves

Setting aside monthly and paying quarterly is the normal rhythm. The IRS publishes four estimated tax payment periods for a calendar-year taxpayer, with payments due on April 15, June 15, September 15 and January 15 of the following year. Where a due date falls on a Saturday, Sunday or legal holiday, the payment is on time if made on the next business day.

Those periods are not equal quarters, which catches people out. The second one covers two months and the fourth covers four. Setting aside monthly smooths that out automatically, which is most of why the monthly habit beats trying to find the money four times a year. The IRS tax calendars publication carries the wider schedule including employment deposit dates.

Getting the number right rather than approximately right

• Ask whoever prepares your return for a percentage based on last year's actual position. It takes them minutes and replaces a guess with a figure.

• Recalculate after anything structural: a change of entity, a new state, a significant new revenue line, or a spouse's income changing.

• Check the balance against the liability once a quarter. Consistently over means cash is sitting idle; consistently under means the percentage is wrong.

• If profit is rising through the year, raise the percentage rather than hoping the early months carry the later ones.

If you are deciding who should own this calculation, our comparison of what a bookkeeper covers against what a CPA covers sets out where the line falls. The short version is that the bookkeeper produces the profit figure and the tax professional sets the percentage applied to it.

Common questions

Should the percentage apply to revenue or profit?

Profit, always. Applying a percentage to revenue produces a wildly wrong answer in either direction depending on your margin. A business with thin margins would set aside more than it earns; a business with high margins would set aside far too little and find out in filing season.

What if I had a loss this month?

Set nothing aside for that month, and do not withdraw from the reserve to cover it. Across a year the profitable months carry the rest, which is exactly what the separate account is for. Review the running balance quarterly rather than reacting to a single month.

Is 30 percent enough if I am also an employee elsewhere?

Possibly not, and this is a common gap. Other income affects which brackets the business profit lands in, so a percentage set purely on business figures can fall short. Give your preparer the full picture rather than the business numbers alone.

A profit figure you can actually set aside against

Numetix closes the books monthly so the net profit number is known while the month is still fresh, with experienced people reviewing it before it reaches you.

See monthly bookkeeping or tax services.

This article is for informational purposes only and does not constitute formal legal or tax advice. Always consult a qualified tax professional regarding your specific situation. The percentages given are budgeting guidance, not tax rates, and no figure here should be relied on as a calculation of what you owe. Payment dates are quoted from the Internal Revenue Service and were checked in October 2026; confirm current dates before relying on them. Numetix quotes tax preparation separately from its monthly pricing.