Question 1

How do you calculate Profit First target allocation percentages for sole traders?

Accepted Answer

To calculate Profit First target allocation percentages (TAPs) for sole traders, divide your real revenue (after GST and contractor costs) into four buckets: Profit (5-20%), Owner's Pay (40-50%), Tax (10-15%), and Operating Expenses (30-40%). The percentages must total 100%. Start with conservative percentages and adjust based on your business needs. For example: 5% Profit, 45% Owner's Pay, 11% Tax, and 39% Operating Expenses.

Question 2

What percentage should sole traders allocate to profit first?

Accepted Answer

Sole traders should start with 5% allocated to Profit and gradually increase to 10-20% as the business matures. The Profit First methodology recommends starting small and being consistent rather than setting an unrealistic high percentage. Even 5% profit allocation is significant for a sole trader business and ensures you prioritize profitability from day one.

Question 3

How much should a sole trader pay themselves using Profit First?

Accepted Answer

Using Profit First, sole traders typically allocate 40-50% of their real revenue to Owner's Pay. This is your take-home salary before tax. The exact percentage depends on your operating expenses and business model. Service-based sole traders with low overhead can allocate closer to 50%, while those with higher operating costs may start at 40% and adjust over time.

Question 4

What tax percentage should sole traders set aside in Profit First?

Accepted Answer

Australian sole traders should allocate 10-15% of real revenue for tax in the Profit First system. The exact percentage depends on your tax bracket. The calculator automatically determines your tax percentage based on Australian tax brackets. This allocation covers income tax on your owner's pay and ensures you have funds available when tax payments are due.

Question 5

What is the sole trader profit planner calculator?

Accepted Answer

The sole trader profit planner calculator helps business owners figure out how much money they need to make to cover everything - their personal income, business expenses, taxes, and still have some profit left over. It calculates your total gross revenue target based on your business goals.

Question 6

What information do I need to provide to use the calculator?

Accepted Answer

You need to tell the calculator: how much profit you want your business to keep, how much you want to pay yourself personally, how much it costs to run your business, and how much you pay other people to help you (contractors).

Question 7

What does the calculator calculate for me?

Accepted Answer

The calculator figures out how much tax you'll owe based on your income (including income tax, Medicare levy, and potentially a surcharge if you don't have private hospital cover). It then adds up everything you need plus taxes to determine your total gross revenue target.

Question 8

What are the smart adjustments in the calculator?

Accepted Answer

Tax is deducted from owner's pay. If your profit is high and tax exceeds owner's pay, then tax is deducted from your profit. This ensures you don't end up with negative income after tax calculations.

Question 9

What results do I get from using the calculator?

Accepted Answer

You get a clear breakdown showing exactly where all your money goes, the total amount you need to earn to meet your goals, the ability to see this as monthly or yearly targets, and real-time updates as you adjust your goals.

Question 10

How does the calculator handle GST registration?

Accepted Answer

The calculator automatically determines if you need to be GST registered based on your gross revenue. If your annual revenue is $75,000 or more, it assumes you're GST registered and includes GST in the calculations. If under $75,000, it shows you don't need GST registration.

Question 11

What is the Medicare Levy Surcharge and how does it affect my calculations?

Accepted Answer

The Medicare Levy Surcharge is an additional tax if you don't have private hospital cover and your income exceeds certain thresholds. The calculator includes this in your tax calculations if applicable, helping you understand the true cost of not having private hospital cover.

Question 12

Can I switch between monthly and annual views?

Accepted Answer

Yes, the calculator allows you to toggle between monthly and annual views. This helps you see your targets in the timeframe that makes most sense for your business planning.

Question 13

What does the breakdown show me?

Accepted Answer

The breakdown shows percentages of gross revenue for each category: gross revenue, GST (if applicable), contractor pay, profit, owner's pay, operating expenses, taxable income, and tax. This gives you a clear picture of where every dollar goes.

Question 14

How accurate are the tax calculations?

Accepted Answer

The calculator uses current Australian tax brackets for 2025-26, including income tax rates, Medicare levy (2%), and Medicare Levy Surcharge rates. It provides estimates based on your taxable income and should be used as a planning tool rather than for final tax calculations.

Business income & tax calculator for sole traders

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