The Draw Decision
How much of the balance is actually yours?
Your books tell you what happened. They do not tell you how much of the balance is actually yours. This splits the account into the three claims that are already on it, and shows what is left.
Your numbers
Sample numbers. Change them to yours.
Collected, not invoiced.
Everything except your own draw.
On business profit, as a percent. Use your accountant's number, not the bracket.
Year to date profit you have not yet paid tax on.
In weeks. The worst stretch you have actually lived through, not the average.
Money already promised: a hire, a truck, a deposit. Zero if nothing is committed.
Safe to draw now
$74,422
Safe to draw now: $74,422. Safe.
$74,422 is safe to draw today. That is 1.4 months of operating expenses beyond every claim already on the account. Taking it as a fixed monthly amount rather than a lump sum keeps the reserve arithmetic honest month to month.
27% of $164,000 earned and untaxed. This is not your money and never was.
7 weeks of gap plus one month buffer, at $54,000 a month.
Already committed. Spent, just not yet paid.
The three claims added up, against $290,000 in the account.
Where the balance goes
| Claim | Basis | Amount |
|---|---|---|
| Cash in account | Stated | $290,000 |
| Less tax reserve | 27% of untaxed profit | -$44,280 |
| Less operating reserve | 7 week gap plus 1 month | -$141,298 |
| Less growth earmark | Already committed | -$30,000 |
| Safe to draw | $74,422 |
If you draw it all today
| Then | Result |
|---|---|
| Cash remaining | $215,578 |
| Months of expenses that covers | 4.0 months |
| After tax and committed growth clear | $141,298, or 2.6 months |
| Longest gap you have survived | 7 weeks, which costs $87,298 |
The operating reserve is sized to your own worst receivable gap rather than a generic three or six months, because the number that matters is the stretch you have actually lived through. Change the gap to 2 weeks and watch the safe draw move: that difference is the cost of getting paid slowly, and it is usually larger than the tax bill people worry about. It is not tax advice.