Tax preparedness is how much of your estimated tax bill you have actually put aside, as a percentage of what you are expected to owe.
100% means the money is there. 40% means most of a bill you already know is coming has not been saved for.
Why this gets its own number
Tax is the most predictable large expense a business has and the one most often not planned for.
The reason is structural rather than careless. Tax is owed on profit you have already earned and, in many cases, already spent. By the time the bill arrives, the money that should have paid it went into materials, a vehicle, or a slow month — and none of those felt like spending the tax money at the time.
The trap of a good year
A strong year produces a large tax bill in the following year. A business that grew fast and spent the growth can find itself owing tax on profit it no longer has, during a quieter period.
This is one of the most common ways an otherwise healthy small business gets into real difficulty, and it is entirely avoidable by moving money as it is earned rather than when the bill arrives.
The practical version
Move a percentage of every deposit into a separate account on the day it lands. The exact percentage is a question for your accountant and depends on your structure and your region.
Doing it per deposit rather than monthly is what makes it work — money that stays in the operating account gets spent, regardless of what it was earmarked for.
See tax reserve for the balance itself.
What this number cannot do
It works from an estimate, not from a filed return. It tells you whether you are on track against a reasonable expectation; it does not tell you what you owe. Only your accountant does that.