Even accountants struggle to pay their own tax — and it’s talked about far less than it should be.

In this episode of Profit First: Beyond The Book, Tim Seymour is joined by Deb Halliday and Jason Withers for an honest conversation about why so many accountants and bookkeepers fall into reactive tax planning, despite knowing better.

They explore how Profit First creates a simple, disciplined system for setting aside tax consistently, removing the stress and last-minute scrambling.

If you’ve ever felt the pressure of an unexpected tax bill, this episode shows how changing the habit — not working harder — is the real solution.

Foreign.

Welcome to Profit first beyond the Book, a podcast that takes you beyond the book with Profit first brought to you by Tim Seymour and the rest of the Profit First Professionals UK and Ireland team.

Welcome.

And welcome again along to another podcast edition of Profit first beyond the Book.

And I'm joined by my fellow members of the Profit first pathway.

Welcome along Deb and Jason once again.

Great to see you here.

Morning, Tim.

Good morning.

And, and today, today we're going to talk about something that might be deemed slightly controversial, but it's something that we know happens regularly and we're going to discuss the accountants struggle to pay their tax bill too.

So Jason, we're not making judgments here, are we?

But we just want to actually help accountants and bookkeepers move forward with their business.

I think one of the core aspects of this is running a business is hard.

Just because we're accountants and bookkeepers is no different really to being any other business owner.

And at the end of the day, the objective behind Profit first is to eradicate entrepreneurial poverty.

And that comes with all of the bells and whistles, ups and downs that go with that.

And I think it is, it's something that we need to recognize does happen in the marketplace.

Not all accountants pay tax on time or have the money saved up in advance.

And all the things we all know that we should do, we understand that is just part of real life.

We see this evidenced by members who have joined through history and it's actually one of the prime reasons that people join, do join, in order to sort that structure out in their business that does give them the framework to get out of that cycle.

So no, definitely no judgment, but I think it becomes one of those topics if we don't talk about it, everybody just pushes it under the rug and pretends it doesn't happen.

And at the end of the day we're probably giving the advice out to clients to do the things save for your tax etc and yet we still find ourselves in that position of we kind of leave ourselves till last.

And we know through a Profit first training we should be putting ourselves first.

So definitely no judgment, safe space within the Profit first pathway group that we have to discuss these issues.

This is about helping people a register the idea.

You're not the only one.

But also there is a way out of the position.

Yeah, yeah, I couldn't agree more.

And, and Deb, Deb, you, you, you speak to a lot of bookkeepers and accountants yourself and you know a lot of people in the industry.

And do you think it's A case of dealing with clients over dealing with ourselves.

Do you think, do you see that a lot?

Do you feel that's what happens?

Yeah, I think it's a classic case of the builder scenario.

Having the unfinished extension or repairs to his own property that get left last.

We always put delivery of services first.

And it doesn't take us really any time at all to tax returns when we know the business.

Of course, we know our own businesses.

So, yeah, it's Parkinson's Law at the end of the day, isn't it?

It will be left right until I know people and myself have been guilty of the deadline because, and sometimes it goes out of your mind because you're so focused on how many tax returns you have to turn over and get right and get authorized and get submitted.

The, the last thing you're thinking of is your own tax return.

And yet we still have the same deadlines, et cetera.

So, yeah, it's a common problem, but one that with us, with the right system can be not an issue at all.

You do it, you can do it in April if you've got the right system, can't you?

Yeah, this is, it's that it creates that internal stress in the background, doesn't it?

You're, you're acutely aware you haven't done your own tax return or you haven't got the money set aside in the tax deadlines fast approaching, but you're pumping out these client tax returns, you're telling them what they need to pay, then you're getting a conversation with them because they weren't expecting it to be so high.

And suddenly it's your fault.

It's absolutely not your fault, of course, but, you know, these are, this is the real world, things that happen.

And inside, behind somewhere in the back of your mind, you know, you've still got to deal with your own, but you've got a few more to do for your clients.

And so it just gets pushed back.

And, you know, I, I, I can remember before profit first with my accountancy business, you know, I, I never had the money set aside for my tax because I was in that monthly cycle.

You know, the money's coming in, the money's coming out.

I'm trying to pay myself at the end of the month is never enough.

Taxes, it's not due yet.

I don't need to worry about it.

It's not due yet.

It'll be all right.

Everything could work out because I'm gonna have a busy month and everything's gonna be fine, and it Never actually quite comes good because we don't have a structure or a framework to follow.

Whereas JSON Profit first gives you that framework to follow, doesn't it?

In particular, specifically talking about tax today.

Yeah, 100%.

And I think that one of the issues that you raise there is it can always be dealt with tomorrow in day to day life.

And I think that, that you know, we would all recognize moments in time.

Well, yes, that's because they'11 months to run in the year.

By the time we get to August and we haven't signed anyone, it's still okay because I've still got four months left, you know, and, and tax becomes the same kind of idea.

I think, I think this also goes much deeper.

The idea that Profit first is just about moving money into a, into a saving space, a savings pot.

Whichever phrase you, you use with your bank is only a fraction of the story.

The habit and the rhythm and the discipline that sits behind it, the human behavior that actually sits behind that is way more important.

And I think it is really about having that piece of discipline, the structure, the accountability of making sure it is a rhythm in your business.

It is an intentional part of how you conduct business on a week to week, month to month basis to ensure that these things are in place.

If we don't have the money to put in that tax account through an allocation, we're really being given a sign that something else in the business is off.

You know, if we don't have that money available and we're not in a position to do that, that might be because we let clients take too long to pay so we don't have the cash coming in.

Okay, maybe that's a sign we need to shift to monthly payments, direct debits.

You know, there are ways around those sorts of things.

There could be all sorts of reasons for it.

But I think the important part about the Profit first aspect is the habit, the rhythm, the behaviors that actually go with allocating that money intentionally on a regular basis really become part of the core of what it's about.

I think the other side, from an advisory point of view, certainly as I look at it with my clients, we're always forecasting ahead.

Right now I'm getting into that mode of thinking about what clients are doing in 26, 27 as a financial year for Those that are starting in April, front and center on that conversation will be how much do you think you want to earn next year?

They will or they won't earn that money, but we will plan for personal tax bill and work out what we need to allocate on a regular basis.

Every time they allocate according to that, you know, the numbers may go up and down during the year whether they're doing better or worse than they thought they were going to.

But the intention comes at the front end of the year, not at the back end.

So again, I think this whole element about how we start thinking ahead and actually walking the walk, quite frankly, in terms of how we conduct business with clients starts at home in our own business.

Couldn't agree more.

It's a very important aspect of being successful as a profit first professional in the future.

If you're going to offer profit first to your clients, is actually being able to live and breathe profit first in your own business.

If you're still struggling to pay your tax bill at the end of the year, you probably haven't quite got a handle on profit first yourself.

And therefore you probably need guidance.

You know, let's be honest about it, because guidance, support, accountability are all the things that have a massive impact on a successful profit first journey.

If we just take tax as one separate thing out of the profit first framework, you still have to follow the same principles.

As the money comes in, you need to put a certain percent into that tax pot and you need to do that regularly.

And when you talk about the habits and behaviors, that's about picking a day and a time each week and sticking to it consistently.

Consistency is key with profit first for me.

And there will be a time when things will go wrong, something will happen, like you said, a client won't pay or someone has stopped a direct debit and it's a big client and it feels like the wheels have come off because this money's not coming in right now.

What am I going to do?

That's the benefit of working with someone who is experienced in profit first, like us, profit first professionals in the profit first pathway to get you back on track.

And I think that's the key message.

But yeah, the behavior and the habit aspect is second to none.

Once you understand that and once you change that mindset, everything then becomes so much easier to follow and so much easier to, to create new pots and, and start strategize about other areas of the business.

But, but from a, from a tax point of view, right now we know this might not go out before the end of January, but we're recording it in January anyway.

And we know for a fact that that deadline's fast approaching.

And there's going to be many accountants of bookkeepers out there that are very aware that they haven't got enough money to pay their tax bill.

And they're probably right now trying to work out how they can cover that bill.

Is that bill going to be covered from a personal credit card?

You know, I know you can't pay by personal credit card anymore.

You used to.

How do I know that?

Because I've been there.

I've been there and I've done it, you know.

So how do you get that money out of that personal credit card to get it into your business account to be able to pay the tax bill that's come in?

Do you ring up HMRC and look for a payment plan?

Is that a good idea if you're an agent, Deb?

You know, if you're an agent for hmrc, do they, do they kind of look down on that sort of situation if you then have to ask for a repayment plan with them?

Yeah, yeah.

Your governing body won't be at all amused that you've missed or can't pay your tax.

I think what happens in real life, real life in real terms that I've witnessed is the money that you earn from doing everybody's tax return in December and January is then lifted and used to pay their own self assessment tax.

So but what that does is it just puts your cash flow in peril for the next few months because if you haven't collected it throughout the year and you're relying on the December and the January to pay your tax, you're, you're right.

What if people don't pay on time?

I mean we, we had a system where before their tax return was submitted, their invoice had to be paid.

So we would do the work.

But to authorize submission, it was paid it, the authorization was in the form of paying the bill.

So.

Because they've all got their tax to pay and of course if they haven't got the money, if your clients haven't got the money, then your bill is going to be pushed further down the line, maybe even into March and April sometimes.

So yeah, so I think that's, that's a problem.

Not just for businesses that have a really good Christmas and January sale, but it's real life for accountants and bookkeepers.

Well, bookkeepers for sure.

Yeah, that's, that's my experience trying to do as many tax returns as you possibly can get them paid.

So you can actually pay your own tax bill.

Yeah.

And so you're not seeing the benefit of the additional money that you're working so hard to earn or just clearing your tax bill.

Whereas if you had been proactive, if you had done your forecast as Jason's talked about, which is what?

As Profit first professionals, we do, we look ahead into the future all the time.

We're not being reactive to what's happened in the past.

We're not even living in the present.

We're always looking ahead.

If you know what your tax bill is likely to be given your forecast and you, you know, let's be honest, you're an accountant, you're a bookkeeper.

You should be able to monitor this on a monthly basis and, and, you know, little tweaks here and there.

If necessary, you should better work out what percentage of your revenue needs to be put into a taxpayer.

Simple as that.

You know, it is that simple.

And by taking that money out of your income and putting it straight into your tax pot, yeah, it means you've got less to run your business on, but it keeps you compliant, it keeps you safe, it protects you from upsetting hmrc, which, let's be honest, you don't want to be doing that.

Nobody wants to be upset in them because you don't want them knocking on the door full stop.

That's a whole can of worms you don't want opened.

So you're protecting yourself, but also you're leaving yourself with less money to run the business on.

So then you have to start thinking about, okay, so what am I paying for in here?

Why is this an issue?

Why haven't I been able to take this money out before?

For where's the money going?

And then you're going down the whole cost analysis part of the profit first implementation, of course, which most people can't do alone, let's be honest.

You know, you need a bit of help on that.

You need to be challenged on.

Is this an investment?

You know, we don't look at it as cost.

Is this an investment?

Does this add to your profit?

Is this actually generating the profit for you?

The fact that you're using this particular thing?

Is it protecting you?

Maybe it's an insurance maybe, you know, and we go through these quite carefully with the fine tooth comb with accountants and bookkeepers that work with us.

So I just wanted to kind of touch on that and bring that into the equation because obviously that's the concept of profit first is not Just popping money into different spaces and pots.

It's actually about the behavior aspect and actually squeezing the money you've got to run your business on, which creates you to be more innovative with what you're doing.

And it makes you, forces you to look at the other areas of the business.

Because most accountants and bookkeepers won't be charging enough.

We'll be doing stuff for free.

You know, we're going down a rabbit hole here, and I don't want to go too far off track because we're here to talk about tax, but I think it's fair to, to touch on those slight aspects because they have an effect on why you can't pay your tax bill come the end of the year.

Have I captured everything, Jason, would you say, or am I missing, am I missing something in that sort of summary of how we operate with profit first?

No, I think that's, you know, all totally fair comment, really, Tim.

I think one of the other things that I would add into this from a sort of a pure profit first perspective piece, is the book will talk about 15% as a tax allocation.

Okay, not a bad place to start, but certainly from a personal piece of technique.

I split that into personal tax and corporation tax.

And generally over the course of the last eight years and however many implementations, I would say the answer is rarely 15%.

Quite often it's less between those two elements combined.

And for me, and the way that I work with clients, I hate the idea that we're saving money for tax that could actually be used proactively within the business from working capital premise.

So if I can do that forecasting piece of work with a client, and we only need 10%, 12%, whatever it might be as a combined thing, I'm busy thinking, okay, well, there's 3% that could go into owner's pay.

Maybe there's 3% that could go Into a marketing pot.

There's 3% that could be allocated to employing more staff, whatever those, you know, dynamics might be within a business, but that is also helping me help the client get a better result from the work they're doing.

So, yes, I think again, there is this element of beyond the book.

Yes, the book, not a million miles off.

It'll be a broad generalization and you won't go far wrong with it.

But we can do better than that.

And that, I think, is another part of this, this whole idea that as you were talking, I'm thinking, yeah, for people who are going through the same cycle, and maybe you're thinking this is the Second or third January, I've got to work out how to do the personal credit card to get the money into my business, pay the tax bill to sort the thing out.

There is a cycle in there and logic would dictate if we could have sorted that problem out on our own, we would have done it already.

So we're now at a point where if you are in that cycle for the second or third time, there is a very straightforward opportunity to think differently about how to create habits, rhythms, structure within your business.

That means this is the last time you have to go down that path and do those last minute calculations.

And that last minute of money juggling.

It really comes down to being prepared to face up to where we are now.

And the answer to that question doesn't matter.

What matters is we know where we are now.

From that point, we can always make a positive step forward.

So I go right back to the front end.

There is no shame in paying your tax bill.

Where are we today?

22nd of January, in a week's time on your credit card.

But take the step to say that's the last time I do that.

I'm going to implement, I'm going to take steps to change that behavior in the next year.

And that's not in 12 months time, that's on the 1st of February.

So break the cycle, take action and create and utilize the framework that's readily available to you with profit first to create positive outcomes for yourself.

Take that stress away, think about where your business really is right now.

Doesn't matter what the answer to that question is, but take the time to recognize where it is and take positive steps to change the outcome across the next 12 months.

I think that's great advice.

And Deb, you know, accountants and bookkeepers will probably have a little bit of extra time in February.

You'd like to think so once they've got the deadline out the way, once they've come quarter, but the fat returns, sometimes the middle of February, you have a little bit more time, you know, to, to reflect on your own business.

Would you say that's a good time to be planning for this, for not happening again?

Yeah, I mean it's a, it's going from being reactive to proactive, isn't it?

It's, yeah, it's, it's, it's vital.

And if you don't do it, if you do it in February, you've got time to test the system ready for the following tax year, haven't you?

So, so yeah, I think, I think it's A great time to do it.

Yeah.

Okay.

So if it's a bookkeeper and you're listening to this and you're acutely aware that you are struggling to pay your tax bills, please don't be embarrassed.

Like we said at the beginning, there's no shame.

You know, we've been here ourselves, I certainly have in the past, and implementing Profit first was the way that I found a route out of that situation, and it also helped me pay off the debt that I had created from that situation.

So there's two ways of looking at this as well.

Let's stop the debt building up, let's get a clear plan for paying tax on time, moving forward, and then let's start to reduce that debt that's built up in the background.

Again, it's going to be weighing heavily on your shoulders, no matter what's going on around you, and all the client work you've got, it's there.

Knock it away back your mind.

So what can you do?

Well, we can help you solve the problem if you come and join us in the Profit first pathway.

So you can find us in a Facebook group.

If you just go on Facebook and type in the Profit first pathway, you will find us.

But if you want to just find us online, you can hit the profit first pathway.co.uk you can see what we're about.

You can see some upcoming online sessions coming up for you.

Um, we'd love you to come and join us on these calls.

Get to know us, have a chat.

We can help solve some of your problems in a.

In a environment that's safe, full of your peers that are in similar situations to you and are looking for a bit of support, a bit of guidance, especially with Profit first and implementing Profit first in your business.

So, so come along and join us.

Sign up for the online session.

It's coming up in February.

You just need to go to the profit first pathway.co.uk we'd love to see you there.

So for now, thank you, Deb.

Thank you, Jason, for joining me.

And this is the.

The podcast where we've talked today about how accountants struggle to pay their tax, too.

It's not just your clients.

We're all in this together and we're all looking to, to solve these problems for you.

And there is a route away from this.

So.

So come and join us in the Profit first pathway.

Do you want to.

Is there anything you want to say to, to round off Deb?

Anything you want to add?

Love it.

Thank you very much and we'll see you next time.

Thank you for joining us on our podcast today.

Profit First Beyond.

The book was brought to you by the Profit First Professionals UK and Ireland team.

If you'd like to find out more about Profit first or becoming a Profit First Professional, head to our website, profitfirst uk.co.uk.