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

We have worked with many clients who were bringing in good revenue but still feeling stressed — unsure how much to spend, how much to set aside for taxes, and whether they were actually making a profit. Once we helped them break their numbers into simple percentages, everything started to feel much more clear and manageable.

A Simple Framework to Follow

A good starting point is to divide your revenue into three main categories: expenses, taxes, and profit. These are not strict rules, but they give you a structure to work with — and a sense of control over your money.

Expenses: 40–60% of Your Revenue

This covers the day-to-day cost of running your business — software, subscriptions, rent, marketing, paying contractors, and everything else that keeps things moving. If this number is creeping above 60%, it may be time to review your spending and identify where you can trim back.

Taxes: 20–30% of Your Profit

This is the money you set aside so you are never caught off guard when taxes are due. A simple habit: move a portion of every payment you receive straight into a separate savings account dedicated to taxes. Out of sight, out of mind — and ready when you need it.

Profit: 10–20% of Your Revenue

This is what you keep after expenses and taxes. Profit matters because it gives you the ability to grow your business, reinvest where it counts, and pay yourself consistently.

Putting It Into Practice

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

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

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

You Do Not Have to Figure This Out Alone

At Banks Bookkeeping Services, we help small business owners in Western Australia make sense of their finances. Reach out today to find out how we can help you stay on track and make better financial decisions.