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How much of an invoice can go to personal spending?

Quick lesson1 min read

To plan what you take out for yourself, separate your business income, taxes you collect on behalf of others, business expenses and reserves for obligations still to be settled.

An example with numbers

Picture $3,000 of your own income already collected, $800 of expenses paid and a $600 reserve you have estimated for future obligations. That leaves $1,600 of cash in this scenario. The reserve is a planning assumption, not a tax calculation.

Try it with your numbers

Repeat with this month's receipts and your actual expenses. Mark invoices not yet paid so you avoid spending money that is not yet available.

This calculator is on its way. In the meantime, you can do the calculation on paper or in a spreadsheet.

Example figures for learning purposes. They are not a recommendation and do not replace professional advice.

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