16 : Variable Income, Zero Stress: My Exact System for Taxes and Paying Myself

If you are self-employed or bring home a different paycheck every month, this episode is for you. I am pulling back the curtain on the exact system I use to pay taxes without stress and pay myself consistently, even when my income is anything but consistent. This one gets tactical.

In this episode I cover the one rule I never break when it comes to my business savings account, why I stopped guessing on taxes and what I do instead, the conservative pay formula I use to figure out what to pay myself each month, and what I do with the money that builds up on top of it all.

Mentioned in This Episode:

Episode 9 : Our Exact Family Budget Breakdown - 6 Steps to Tell Your Money Where to Go

WORKOUT WITH US - join my monthly workout subscription (the program I personally follow every single week) 

BLOG POST for this episode

Transcript

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If you are listening to this episode the week that it's released, that means it's the last full week in March. So we are beginning a brand new strength cycle in the app next Monday, March 30th. Now is the perfect time to join the app if you are interested in having your workouts planned for you. This is the exact training plan that I follow on a weekly basis. I personally do the split program in the app, which is four days of body part split strength training. We also have a three-day full body strength program, which is the absolute perfect place for a beginner to start. It's also a great place to start if you like to incorporate running into your exercise regimen. So it's three days of full body strength workouts. And then, like I said, we have the split program, which is a four-day body part split training program that also has an optional fifth day, which is full body conditioning, and that workout is always scheduled on Wednesdays each week. So, like I said, that brand new strength cycle is going to begin Monday, March 30th. Now is the perfect time to join the app so that you can get a swing of the functionality and how things work before we hit the ground running on Monday. I'm your host, Carly Kaikendal, and this is The Daily Technique, the podcast about building sickening consistency through everyday habits. Being occasionally great does not get you very far, but being consistently good is what moves the needle forward. Every time that you follow through for a workout, a meal, in motherhood, in your finances, in your business or in your life, you're putting another penny in the jar of the person you want to become. One penny that doesn't feel like much, but those daily deposits compound over time. Whether you're rebuilding habits, rebuilding confidence, or just simply trying not to quit that you're in the right place. Let's add another penny in the jar. Today's episode is very tactical. I am going to be walking you through how I pay myself as a business owner as well as how I plan for and pay my taxes. I will also have a blog post to accompany this episode so that you can see these steps written down if you find this episode helpful and you want to apply what I walk you through today in your own life and business. And that blog post will be linked below in the show notes. The how I pay myself portion can really be beneficial to anyone who has a variable income. And when I say variable income, that just means you don't get the same paycheck every month. So the amount of money entering your bank account each month can sometimes be dramatically different than the month prior. Maybe you have a base salary and you make commission on top of that. So one month of your income might be higher or lower than the previous month. That's also what I mean by variable income. And the tax portion of this episode is geared towards the self-employed listeners. So maybe that's online fitness coaches like myself, online nutrition coaches, or influencers, like fitness influencers, fashion influencers, lifestyle influencers, food bloggers, or just anyone who owns a business and pays themselves through that business. And when I originally typed the outline, I intended to have the how I pay myself portion as the first section. But because I always ensure that my taxes are covered before I actually pay myself, it just made more sense to move the tax planning to be the very first thing that we discussed today. So without further ado, part one is taxes. And with tax day approaching on unfortunately April 15th, I know a lot of business owners are just hoping that they either, one, paid enough in estimated quarterly taxes throughout 2025, or two, have a good estimate for what they're going to owe in total if you're someone who pays lump sum taxes. And trust me, I had no idea what estimated quarterly taxes were when I first started my business. And so I didn't pay quarterly taxes. I just got to the end of the year and I was like, here's what I owe. And now that's that's laughable. But at the time I just I had no idea. But now I do. So I'm gonna talk about paying estimated quarterly taxes as well as paying myself each month. And when it comes to taxes, the goal is basically to not owe the government any more money than you've already paid them, because then that means that you underpaid your taxes that year. But you also don't want to get this huge tax refund check either, because then that means that you overpaid them in taxes. And I don't know about you, but I would rather have that money in my pocket than to expect the federal government to pay me back anything that I potentially overpaid them in taxes throughout the last year. The key point that I want to let you in on when it comes to taxes is that I always keep enough money in my business savings account to cover my next estimated quarterly tax bill. So I never let my business savings account dip below that number. And with April 15th quickly approaching, I'm going to be paying out my total estimated quarterly taxes from my business savings account. And then by paying that tax bill, my savings account is then going to dip. And so it might potentially drop below the amount I need for my next quarterly tax bill. So then what I will do is I will just chip away at increasing that savings account back over the next few weeks to then cover that next tax bill. And this is going to make more sense as we dive into how I pay myself, but just know that I always keep the minimum amount in my savings account to be greater than or equal to my next estimated quarterly tax bill. So speaking of estimated quarterly taxes, I cannot recommend this enough as a business owner. This is going to prevent you from being hit with a huge tax bill in April. And it's also going to prevent you from being hit with any late fees or any interest that potentially would accrue. And I only know how to do this because I met with a tax advisor who reviewed my previous business financials with me, so from previous years, as well as my projections for what I thought thought I could do revenue-wise the following year. So like the next year. And based on those actuals, meaning the years past and those projections, meaning what I thought I could do that next year, he came up with an estimated quarterly tax amount for me to pay. That allowed me to have a set state tax amount and a set federal tax amount that I would be paying every quarter versus me paying an amount and hoping it was close to what I actually owed. I will say this though, I had done a dang good job on my own before I got this guy's help. Because, like I said, at the end of every tax season, if you don't owe a lot of money or you don't get a lot of money back, that means that you were almost right on the money with what you paid. And I was actually able to do that on my own. But it also required me to track my top line revenue, track every single write-off, and then figure out what tax bracket that put me in, and then pay what I assumed was the right amount. So it was actually a really great exercise for me to do, but it it just was a lot of work that it wasn't required. And now my workload is significantly less, and I'm still ending up like around the same where I don't get a huge refund, nor do I owe a huge refund. So it all shakes out in the end, but with a lot less meticulous effort on my part. And like I said, I was doing a really good job because I never owed or got a big refund, but it was just a ton of work and the amount that I was paying each quarter was really varying. So now the that the amount I pay is the same. In some cases, it might be more or less than I actually owe that quarter, but over the course of 12 months in the year, it all ends up shaking out because once again, I haven't been hit with a bill and I haven't owed a bill. And I cannot recommend meeting with a tax advisor enough because it's just relieves a lot of stress for me personally. And I still keep track of all my business expenses. And I send our tax guy, I don't even know what those people are called, accountant, tax guy. I call him my tax guy. I send him those categories and totals in a profit and loss statement each year, but it just feels like so much less work, and I'm no longer nervous if I'm paying around the right amount. When it comes to actually filing my taxes, I file as married filing jointly, and my income is classified as self-employment income from my LLC. I am taxed as a sole proprietor, not an S-corp. And without getting too into the weeds, if you file your taxes as an S-corp, it requires for you to pay yourself a set salary each month. Whereas as a sole proprietor, which is how I file, I have full flexibility to decide what I pay myself month to month. And I know that there are software platforms out there like QuickBooks, and I think Xero is another platform that you can use to track everything. But I personally just use a Google Sheet to track incomes and expenses each month. I've gotten my spreadsheet to a point that I feel super comfortable and confident in tracking everything. And I'm of the mindset of if it's not broke, like don't even try to fix it. And so right now it still works really well for me. And I have a monthly recurring reminder on the first Monday of each month for me to just kind of shore up all of my business financials. So I track top line revenue and I track expenses for the month that just ended. And then once again ensure that I have enough to cover taxes, which I always do. So that covers the tax portion. And I'm now moving into part two of how I pay myself, but we do touch on taxes again, just because I walk through the whole flow of money that enters my account, where it all gets divvied out to. And so we will touch on taxes just a little bit more in this, just because it's so relevant to this section as well. So part two, how I pay myself. For context, I am a self-employed personal trainer and nutrition coach with a variable income. So my income is generated from my app workout membership and then the nutrition clients that I have. And it took me a while to figure out where to land on what I should be paying myself. And I'm constantly refining this more and more over time. But I'm hoping that this approach that I have, I'm hoping it can save you some time of trial and error because this approach is something that I have kept up for quite a while now because it has gotten me exactly where I had hoped it would. And as a disclaimer, my approach is very conservative. And since my income changes month to month based on the number of app subscribers and then the number of macro nutrition clients that I have, I'd personally rather be conservative because the last thing I want is to get kicked in the teeth when I'm going to file taxes. Plus, Eric and I are saving up for some specific things. And right now, those things are focused on home renovations. So I'd rather pay myself significantly less than I could pay myself to just have more margin in my life. But this conservative approach, it works for us and it has led to way less stress around money. And one of the greatest skills that you can have, not only as an entrepreneur, but just in life in general, is to learn to live on less than you make. And if you're an established entrepreneur, maybe you already have a decent handle on how you pay yourself, how you pay your taxes. But if you are a new entrepreneur or you are wanting to start a business, I just have a lot of advice that I can give that can potentially save you a lot of panic and stress. As I mentioned, my income can have very drastic fluctuations month to month. I have actually shifted a lot in my business so far in 2026. So the things that caused the big monthly swings actually aren't even as much a part of my business or really a part of my business at all anymore. But I do still have some variability month to month. So the things that used to really swing either my higher or lower income months were group coaching launches and pump merch, which was like a t-shirt and trucker hat line. Those kind of launches would really swing my income month to month. I used to host four rounds of group macro nutrition cohorts. So four times a year, about one each quarter. And since those are one-time purchases, they would generate a big upward swing in revenue for that month. And then that would not be there the next month because it was a one-time purchase. And then, same for Pump Merch. If I launched new styles, I would see a revenue spike from that launch, but that spike would not hold up the following month simply because I didn't do new style launches on a monthly cadence. But at the beginning of this year in 2026, I dissolved both of those parts of my business, which is why I mentioned that the swings aren't as big as they used to be for me. So, with all of that being said, here's how I arrive at my monthly number for how I pay myself. And as I mentioned, this is a very conservative approach, but it has not failed us yet. It has allowed us to easily pay taxes with zero stress. It has helped us build up our savings account to cover occasional big purchases, and it has allowed us to consistently invest for the future. So here's what I do: I look at my last six to nine months of top line revenue. So that means gross income, as previously mentioned. And of those six to nine months of top line revenue, I actually remove any of the big swing months due to higher income. So for very easy and round number purposes, I'm just gonna give you a fake example here to actually walk this out with you. And I'm gonna look at nine months of gross income in this fake example. So let's say that in January I have a group launch, and so I do$13,000 in top line revenue. When I say top line revenue, that means we haven't taken out any money for taxes, we haven't taken out any money for expenses. But top line revenue, January is$13,000 because I had a group launch. February, no group launch, so top line revenue drops down to$6,000. March, another$6,000 month. But in April, I host another round of group coaching, and so I have another income spike,$12,000 top line revenue. May dips back down to$6,000, June,$8,000, July,$9,000. August,$12,000, another group launch, and then September dips back down to$9,000 again. So in review, January 13, February 6th, March 6, April 12, May 6th, June 8th, July 9, August 12th, September 9. So there is variability month to month. If you take the average of all of those nine months that I just mentioned, the average would be$9,000 top line revenue. So if we look back at these numbers, the high swing revenue months were January$13,000, April$12,000, and August$12,000. Because for this example, those are the months that I hosted around of group macro coaching. And those were one-time purchases, and they don't generate any what we would call recurring monthly revenue. So what I do is I remove those big swing months to arrive at my average monthly income. So I'm going to pretend as if those big swing months didn't happen in a sense when it comes to just how I pay myself. Now obviously those months did happen, and we will get to that in a second. But by doing this, so by removing those high swing income months, it obviously brings the monthly average down. So when I removed the$13,000 a month of January, the$12,000 months in April and August, that brings the monthly average down to about$7.3,000 per month when it comes to top line. So that's about$1,700 less than the$9,000 monthly average when we did include those big swings. So after the$7.3,000 from removing the big swings, that is what I use to base my monthly income on. And that number is before we take out any monthly expenses for the business. So here's why I have found this as a helpful approach. You simply do not know and can never guarantee how a launch will go. And also, I personally do a yearly financial planning and projection meeting with myself where I project how many people I think will sign up for the things that I launch each year, and then what I think my monthly revenue will be, but it's still just a projection because we don't know the future. Also, some months my projections are very close, and then some months I over-project, and some months I underproject. So because my income is variable, or maybe we should use the word volatile or volatile, I personally love the conservative approach because I am not betting on those big swing months to happen launch after launch after launch. And by taking this conservative approach, some months I am paying myself significantly less than what I am actually making, but I am never paying myself more than what I am making. And this ensures that I'll never have to worry about being able to pay my tax bill. I won't have to worry about my monthly operating expenses. And then I'm obviously paying myself an income that Eric and I can spend, save, and give with. So for my business, I have both a checking and a savings account that is separate from mine and Eric's personal account. I have a weekly cadence set up on the back end of my business so that I get paid every Monday and that amount gets deposited into my business savings account. And as I mentioned in the tax section, I made sure that I have enough in my savings to cover that tax amount every single quarter. And since my taxes are already covered, I then transfer money from that business savings account into my business checking account so that I can cover my monthly operating expenses. So right now, my personal recurring monthly operating expenses that I pay for for my business are the training platform that I use for my app workouts, a G Suite account, a Canva account, my iPhone storage, my phone bill, show it, which is how my website is run, MiniChat, which is DM Automation, BuzzSprout, which is where I host my podcasts, Zapier or Zapier, which helps run backend automations for me, helps platforms kind of speak back and forth to each other. Flowdesk, which is how I send my emails. And then I also use my Peloton membership as a monthly recurring business expense as well. So all of those are my recurring monthly expenses. Those appear at the same amount every single month. So I move enough money from that business savings account into my business checking account to cover those recurring monthly expenses. So now that we have accounted for taxes and monthly expenses, I then pay myself. And instead of just paying myself the remainder of what's left over after taxes and expenses, I choose to set a certain amount each month that I pay myself. And that amount remains the same for several months. So I'm not changing it month to month based on what I'm making. So with This income that I pay myself, we combine that with Eric's monthly income to then create our total family budget for the month. And if you want to listen to an entire episode that's dedicated to our family budget, that is episode nine of the podcast titled Our Exact Family Budget Breakdown Six Steps to Tell Your Money Where to Go. So when it does come to that amount that I pay myself monthly, there will be times that I will do that same exercise of finding my nine-month average revenue and arriving at a different amount to pay myself, but it's not something that I'm changing on any regular basis. And by paying myself that same conservative amount each month, it makes budgeting and saving so much easier because we are intentionally paying me less than my business makes just to cover our basis for taxes and expenses. But it also allows us to then build up money in my business savings account. Because, like I said, those big swing revenue months, they still happen, right? And since quarterly taxes and recurring business expenses are not changing month to month, we can still build up that business savings account. So with the money that then starts building in my business savings account, this is money that we can use to maybe transfer to my business checking account and pay for things like a bigger purchase of hiring my business coach, like we recently did, or paying big purchases for the renovation of our home gym. Or we might transfer some of that into our personal account. It kind of like me almost like paying myself a bonus, and that can cover things like vacations, car upgrades, or home renovations. So, in review on how I arrive at what I pay myself each month, step one, I calculate my monthly top line revenue number for budgeting purposes, which means I take those last nine months of revenue minus any of the big swing months. I find what the average of those months are. Step two, I have my payment processor for my business pay me on a weekly basis. I get paid every Monday. Step three, my estimated quarterly taxes are already accounted for because I don't let my business savings dip below that. Or if it does, like meaning if I pay my tax bill and it dips slightly below, I just chip away at that quickly and build that back up within the next few weeks so that I am already accounting for my next tax bill. Step four, I transfer enough money from my business savings account into my business checking account to cover my monthly recurring operating expenses, meaning all those platforms that I mentioned I pay for on a monthly basis. And then step five, I pay myself X amount every month. And then I leave the remaining balance in my business savings account and I let that build up so that we can make bigger purchases into in the future. That's all for today. Don't forget about the blog post linked in today's show notes so that you can easily reference back to these steps in a written format. And I really hope that you leave today's episode with a lot more confidence in regards to how you can potentially pay your taxes and pay yourself within your business, or like I mentioned, if you just happen to have a variable income. And I know that this conservative approach is not for everyone because it really is hard to not want to reward yourself and then spend that hard-earned money as it enters your bank account. But like I mentioned, when you live on less than you make, it provides peace that is so hard to describe until you just experience it yourself. So if you found this helpful, please leave a rating or review wherever you listen to podcasts. And maybe your spouse or your friend has a variable income and they could benefit from listening to this episode. I would love it if you sent it to them. And until next time, keep adding another penny in the jar.