Is this correct for net profit before tax

90,000+

2,000+

2,000+

40,000+

60,000

Total 1004,000-

20,000

Total net profit $ 80,400

Based off info in attached picture

Business details Andrew has established that the business will comprise a workshop with 1 hoist, equipment and consumables to service Motor vehicles. He will be the sole mechanic working on vehicles. Whilst he will also work on administrative duties he will employ a family member to work part time to handle bookings, customer contacts and accounting tasks. Ideally he would like to commence business as soon as possible however a number of details need to be finalized. Discussions have been held with local authorities and Andrew has carried out preliminary research relating to the total market size in the area, work hours, pricing and expenditure. Andrew plans to commence business in July 1 of the current year, which is 3 months from now. The following assumptions have now been developed. Income Objective Andrew understands the pressure on earnings in the first year. The Net profit after tax objective is $70,000. This is made up as follows - 1. For the first year he would like to earn enough to potentially withdraw $60,000 2. He has given thought to the cost of starting the business. This will depend on the outcomes of the financial plan. He has however made initial assumptions relating to funding. He has savings of $40,000 which he plans to inject into the business as a capital contribution, He would like a return of 5% on this i.e. $2,000. 3. He will need to borrow money to fund the balance of the initial cost of starting the business. The total amount the borrowing has not been determined however he has allowed $6,000 a year to repay the loan principal. 4. He would like to leave $2,000 each year in the business for future growth. Note that the Net profit above forms part of the tax liability (along with other sources of income) in the hands of the owner not the business as a separate entity. From a personal perspective he will therefore need to allow an amount for taxation. The amount of tax expense calculated based on this component of his total taxable income is $20,000. The Net profit before tax objective is therefore $90,000. Calculation of (Productive) work hours. LA022439, Assessment 1, BSBSMB402, Ed 2 New South Wales Technical and Further Education Commission, 2017 (TAFE NSW), Archive version 1, November 2017