What it actually takes to make $100k

Let me just break down what it actually takes to make $100,000 in net cash flow to you personally as an entrepreneur. (Just the math, we won't go into the pain of this whole process.)

Employees need to know this as well. So I encourage you to share with them.

This is also case in point why your goals need to be bigger if you haven't surpassed this yet... and once you make $100k, you realize it isn't as much as you need to do the things you want to do...

For this story, this person is single.

On to the math...

Say you have a service based-business. The business will have to make approximately $650,000 in revenues before you make $100k, after tax and all.

Here's the breakdown:

$650,000 revenues

• less owner payroll of 65,000

• less all other payroll of 130,000

• less COGS of 195,000

• less all other expenses of 195,000

That leaves a net profit of $65,000 (or 10% of revenues). Most businesses don't even make that so I'm being generous here...

If you're business is taxed as an S-corporation, that $65,000 payroll + your$ 65,000 net profit will be reported on your personal tax return, where the federal and state income tax rate combined will probably be around 25% unless you're doing tax planning (another story).

Before tax, you have net income of $130,000.

Stay with me here... this is where people lack clarity and lose it...

So for taxes, the IRS will allow single persons deduct 13,850 from their net income in 2023 which now makes you have taxable income of $116,150 ($125,000-$13,850).

That $116,150 * .25 = $29,038 in tax.

Which, over the course of the year, leaves you with $130,000 - 29,038 = $100,963.

$100,963 after all of that.

Employees & Entrepreneurs take note.

This is clarity to cash flow.

Wouldn’t having this clarity over your cash flow give you confidence to set the right goals?

Of course it would. Level up with Progress and reach out to us to get started.