Let’s talk about the thing in business that makes every business owner groan: Saving for taxes. Because, really, when all those shiny numbers get deposited into your account the last thing you want to do is put money into your tax savings.
Am I right or am I right?
So what happens? First, we pretend that we don’t have to save for taxes. We spend our dollars on all types of cool biz stuff or even take a little out to pay ourselves. Then, sometime during the year, we panic because we haven’t put money into our tax savings. And then we freak when we see our tax bill and don’t have the funds to pay it.
There has to be a better way… and there is!
Let me introduce you to my new favorite app: Qapital.
Qapital is a FREE savings app that AUTOMATES your tax savings. How it works is that you set up rules and every time one of the rules is triggered, Qapital automatically transfers money into a FDIC insured account savings account. How much you save depends on your rules- you have complete control over your savings.
Note: Since I’m so obsessed with Qapital (and I think you will be too) the links in the post are affiliate links, which means I earn a small commission if you sign up via my link. I ONLY use affiliate links for software or products I have used for myself or clients.
Why I love Qapital
Before I show you HOW to set up Qapital, I want to tell you WHY I love the way Qapital works.
First, it makes it hard to blow off your savings. The biggest reasons people don’t save is because they don’t have the self-control not to spend the money in their account. When the money is there we have a natural inclination to spend it. We’ll even “forget” to transfer money to our tax savings so we have more to spend. (not that I’ve ever been guilty of that…um, yeah right)
Second, Qapital transfers your money into a separate bank account. While some people might not like the idea of their money leaving their accounts, I LOVE the fact that I don’t have immediate access to my savings. Sure, I can transfer the money out at any time, but it’s not the same as going to the ATM.
Typically you have to wait a few days for the transfer from Qapital to be completed. This means you can’t impulsively pull money out of your savings whenever you feel like it. This means you have to think through your spending decisions. This means you’re more likely to leave your savings alone.
This is huge. Again willpower is the number one saboteur of saving and Qapital is forcing you to have greater willpower about your money.
Setting Up Qapital
The first step is to download the app (duh), which you can do here.
Next, you’re going to link your bank accounts and here’s where you should PAY ATTENTION.
I made a huge mistake when I set up Qapital. I didn’t realize that Qapital automatically links ALL of your accounts listed in your bank- even the personal ones. You need to go into your accounts and manually unlink any personal accounts and savings accounts.
Why this matters is because later you’ll be setting up a rule to save a percentage of every deposit for taxes. If you don’t unlink your personal and savings account, every time you pay yourself and transfer money to your savings, a percentage will be withdrawn by Qapital. THIS IS NOT GOOD.
So take a few moments and unlink any bank accounts that you don’t receive business deposits into.
- Go to AccountsUnder Linked Accounts choose your bank account
- Under Linked Accounts choose your bank account
- Touch the account you want to disable
- Turn off Link to Qapital and Use account for Rules
Don’t be me and accidentally have thousands of dollars withdrawn from you account for one small oversight!
How to Automate Your Tax Savings
Let’s get into why you’re really here- to automate your tax savings. Like I mentioned, you set up rules in Qapital and they already have a Freelancer Rule that you can start with.
Here’s what you do:
- Open Qapital and Press the + button
- Qapital requires that you set a Goal for your savings. Choose Just start saving and enter in the following info:
- Name your goal– Try to make it something fun to remind you why you’re doing this!
- Set your goal amount– Leave blank unless you have a tax savings goal in mind
- Choose Active Rules
- Choose New Rule
- Qapital now shows you a list of rules. Scroll down to the bottom and choose Freelancer Rule.
- Now you are going to set up your rule! Here are the fields you need to map:
- If you receive a deposit…
- To your: Choose all bank accounts that you receive business deposits to
- Of more than: If you put 0 here then this rule will apply to all deposit. I have mine set at $100 since any deposits under $100 are typically reimbursements and I don’t want to save on those deposits.
- Then Qapital will…
- Save: Choose your percentage. I have mine at 20%. Remember you get taxed on your net income, not your gross income. I’ve figured out that, due to my business expenses, my tax liability is about 15% of my gross income. I’ve rounded up a tad to be safe. You can put any number you want here.
- And Fund it From…
- Your: Choose the same account the deposit went into
- If you receive a deposit…
- Click Create Rule
- The rule you created will automatically be turned on and applied to this savings goal. Touch the back arrow.
- To finish, choose Create my Goal
And that’s it! Qapital will start automatically saving a percentage of your deposits for taxes!
Other Ways to Use Qapital for Your Business
Qapital has the ability to get REALLY sophisticated with their rules. Some other fun ways to use Qapital for your business savings are:
- Budgeting rules- Set a budget for how much you want to spend at, say Starbucks, every week. If you spend less than your budget Qapital saves the difference
- Guilty Pleasures- Save money anytime you spend money at a place that’s your guilty pleasure
- Round Up Rules- You can round up every purchase to the nearest $1-$5 and save the difference
- IFTTT Integration- You can save by doing pretty much anything! Save when you go to the gym, complete a task on your todo list, or when you hit your daily steps with your FitBit.
What do you think? Are you going to start using Qapital to automate your tax savings?