Category Archives for Taxes

The Art of Doing Taxes Without a Bookkeeper

Most people’s least favorite time of the year is coming. No, not Valentine’s Day. Tax Day.

As a business owner, you have the responsibility (and privilege) of filing your taxes with the federal government and at the state level. Tax time has a really bad reputation because it takes time away from business and life.

But we’d like to encourage you to shift your thinking around taxes. Paying taxes means that you’ve earned profit in your business. And while it might be painful to let go of those precious dollars, with Profit First you could be incredibly prepared.

When money is tight, it’s common to want to hold onto it and avoid paying for help in your business. But having help with bookkeeping and taxes is actually one of the best financial decisions you can make (and we’re not just saying that because that’s what we do).

Let’s take a look at what doing your taxes looks like without a bookkeeper:

  • Reconcile your books. If you haven’t been doing this monthly, you’ll have a whole year of transactions to take care of.
  • Review any unpaid invoices in accounts receivable and get aggressive about collecting them. Having revenue from last year carry into the new year isn’t ideal.
  • Ensure you have your employees’ and vendors’ correct addresses and prep both W-2s and 1099s for them, before the end of January.
  • Prepare a fixed assets register, calculate depreciation and make book adjustments as needed.
  • Perform account analysis on all other balance sheet accounts to make sure all balances are correct and current.
  • Match all transactions with their corresponding documents–receipts, bills, packing slips, etc.–to make sure you have the paper trail you need.
  • Download bank statements and store in a safe place.
  • Download payroll reports and store them in a safe place.
  • THEN get to work on your tax documents!

This is a truly abbreviated version of our 31-point checklist for the end of the year. So much more goes into ensuring your books are up-to-date and that you’re following the letter of the (tax) law.

Download the 31-point checklist here!

On the plus side, tax time is a breeze with a bookkeeper on your side. Not only does a good bookkeeper take care of most of the above for you, they’ll also work with your accountant so you’re not the one in the middle. There shouldn’t be any hunting for documents and forms because your bookkeeper makes sure they’re already accounted for.

And even better is that a good bookkeeper will walk you through how to painlessly have the tax funds you need come tax time. So there’s no putting off your IRS bill–because that’s never a good idea.

3 Down, 1 To Go

It's hard to believe that we are almost 3/4 of the way through 2019. In the US you just sent your quarterly tax payment in (it was due Sept. 16).

Or did you?

Take it from me, you DO NOT want to owe taxes to the IRS. I have been there, and it's the worst. Talk about sick to your stomach. 

It's crucial you are proactive regarding your tax situation. Here's what you need to do going into Q4. 

1) Check in with your accountant and/or tax preparer today and have them report to you on your tax position for the year so far. If you have grown this year it is very likely you will owe more tax than you have been sending in quarterly. Starting to prepare for that NOW will save on your antacid bill on April 15th. 

2) If you haven't already, separate the taxes you will owe from your operating account. It's too tempting to "borrow" money from your main account and then never put it back. The minimum you should be putting away is enough to cover quarterly payments. Take it out of your Operating Account and leave it alone until you have to write that wonderful check to the tax man. You'll be glad you did.

Those two simple steps will help make sure you don't dread the next tax deadline, by being prepared and having managed your cash well.

Now go do it!

How Taxing was Tax Season For You?

One of the most stressful times of the year for many business owners is "tax season" - that frustrating period of time between about the end of January and middle of April, when your accountant or tax preparer is performing some kind of alchemy on all the receipts, documents and records you sent them from the past year, coming up with your tax bill for the year.

And You?

You spend that period of time hoping and praying (and maybe doing a lot of sweating) that you don't owe a bunch. Because you don't have any extra cash just lying around waiting to send to the government.

I've been there. 

And it's not always about just sticking your head in the sand and hoping that taxes just get abolished so you don't have to pay them. One of the big mysteries surrounding taxes for me was how to know if I was putting away enough as our business scaled. We grew really fast over the period of three or four years, and the privilege of earning more is you get to "contribute" more to the tax man.

And while you aren't going to get out of paying your taxes, April 15th (or 30th my Canadian friends) doesn't have to turn you into a stress monster every year. 

Implementing the Profit First Cash Management System in your business will ensure that will not be left scrambling at the end of the year coming up with money you don't have to pay a tax bill you don't really want to, but have to. You can delay paying your vendors, or yourself, but the tax man is GOING to get his. 

NOW is the time to get your tax situation settled for next year, and once and for all. 

Contact me today and let's get working on getting your taxes taken care of for next year, as well as creating your permanently profitable business.

Let's Do This!

Dean

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