What Percentages of Revenue Should You Allocate to Expenses, Taxes, and Profit?

One of the most common challenges business owners face is not knowing where their money should be going each month. We’ve worked with many clients who generate solid revenue but still feel stressed - unsure how much they can spend, how much to set aside for taxes, and whether they’re truly making a profit.

Once we help them break their numbers into simple percentages, everything starts to feel clearer and more manageable.

A helpful starting point is to divide your revenue into three main categories: expenses, taxes, and profit. These aren’t strict rules, but they provide a solid framework to guide your decisions.

Expenses: 40–60% of Revenue

This includes the cost of running your business - software, subscriptions, rent, marketing, and contractor payments. If your expenses are creeping toward the higher end (or beyond), it may be time to review your spending and look for opportunities to cut back or optimize.

Taxes: 20–30% of Profit

This is money set aside so you’re prepared when tax time comes around. A simple and effective habit is to transfer a portion of every payment you receive into a separate savings account dedicated to taxes. It’s a small step that can prevent a big headache later.

Profit: 10–20% of Revenue

This is what you keep after covering expenses and setting aside taxes. Profit is what allows you to grow your business, reinvest strategically, and pay yourself consistently - aka the whole point of being in business in the first place.

A Simple Example

If your business brings in $8,000 in a month:

• $3,200 to $4,800 may go toward expenses
• $1,600 to $2,400 may be set aside for taxes
• $800 to $1,600 can be kept as profit

When you start allocating your money this way, decision-making becomes much easier because every dollar already has a job.

If you’d like help organizing your numbers and building a system that actually works for your business, we’d love to support you. Reach out to learn how we can help you stay on track and make more confident financial decisions.