If you run a limited company in Ireland, one of the biggest sources of stress is not knowing how much to save for taxes.
Should you be setting money aside monthly? Weekly? Are you putting away too much, or not enough?
Here’s a simple, plain-English breakdown to help you stay in control and avoid those dreaded surprise tax bills.
Why most small businesses get caught out
Many small business owners only hear from their accountant once a year. By then, it’s too late to plan and they’re left scrambling to pay VAT, PAYE, or Corporation Tax.
The solution is simple: build tax planning into your cash flow every month. Here’s how.
1. Know your main taxes
There are three main taxes every limited company needs to plan for:
Corporation Tax
12.5% of your net profits
Due 9 months after your financial year ends
Larger profits may require preliminary payments
VAT
Usually 23% of sales if VAT registered
Filed every two months
VAT on expenses is reclaimable
PAYE (for director or staff wages)
Covers Income Tax, USC, PRSI
Paid monthly to Revenue
Due by the 23rd of the following month
2. How much should you set aside for taxes?
A good rule of thumb is to save a percentage of your income into a separate tax account. How you pay yourself, salary vs dividends, can affect these amounts.
👉 Read this guide on how to pay yourself smartly so you’re planning from the right base.
Rough estimates:
12–15% of net profits for Corporation Tax
20–23% of gross sales for VAT
30–40% of salaries for PAYE (if running payroll)
You’ll fine-tune this over time, but these figures give you a safety net while you build your forecasting habits.
3. Use a separate tax savings account
One of the easiest ways to protect your cash flow is to move tax money out of your current account.
Set up a “Revenue Holding” savings account
Transfer your estimated tax amounts weekly or monthly
This stops you from accidentally spending funds that belong to Revenue and gives you a clear picture of what’s actually available.
4. What if your income is inconsistent?
If your business income fluctuates, save a percentage from each payment instead of relying on a monthly target.
For example:
5% of income toward VAT
10% for Corporation Tax
15% for PAYE if you run payroll
This way, you’re staying ahead during your busy periods and protecting your cash during quieter ones. If your income feels unpredictable, that’s usually a sign of deeper cash flow issues.
👉 Here’s why cash flow problems are so common in small Irish companies and how to fix them
5. Check in monthly
Tax planning works best when it’s part of your regular business rhythm. Set a monthly reminder to:
Check upcoming tax deadlines
Review your savings progress
Compare actual vs estimated liabilities
Tools like Xero or a simple spreadsheet can help automate some of this and make life easier.
Common mistakes to avoid when planning for tax
Guessing what to set aside instead of calculating
Spending your VAT money before the return is due
Relying on your accountant to remind you about payments
Not reviewing your cash flow regularly
It’s not about perfection. It’s about having a habit that protects your business from surprise bills.
Final thoughts
Setting aside money for tax every month gives you peace of mind, protects your cash flow, and keeps Revenue surprises off your back.
Start simple, stay consistent, and don’t be afraid to ask for help if it’s all feeling a bit too much.
