We recommend putting aside 20% of everything you earn to make sure you have the cash there and ready when it is time for income tax. You can then regularly (monthly or quarterly) assess your year to date profit to ensure that you are saving appropriately for your expected tax liability and also comparing this to the total Pay As You Go Instalments you may have made.
If you’re registered for GST, you’ll need to remember to keep an additional 10% of sales aside to pay your GST bill. While you may have GST credits on expenses to reduce the GST bill, it is better to have cash available for your expected bill, than to find yourself needing to contact the ATO with a payment arrangement.
