Many business owners wait until the end of the year to start their tax planning. But this is too late. Ironically, business owners have been thinking about their tax bill throughout the whole year but do not begin to act until the year is almost over when there is little time to do much about it. You need to know that this does not have to happen to you.
Jerry Mills, founder of B2B CFO © and the author of the book, The Danger Zone, provides an interesting story from his book. While meeting with a business owner, he was asked, “Jerry, let me ask you a question. Why did my CPA make me write a check to the IRS for $138,000 when my company doesn’t even make any money?” This came as a huge shock to this business owner. He had no idea that he was even going to have any taxes to pay, much less one this large.
Another business owner, who later became a client of mine, told me about how he landed a contract that he had been pursuing for over a year. This one order would equal over fifty percent of his entire sales for the year! He ended up closing the deal in the last two weeks of the calendar year and received a very large check from his customer. But unwittingly, this created a tax problem for this business owner. Because of the structure of his business he had to take this money as revenue in the current year while all of his expenses in filling the order would not occur until the next year. As a result, he had significantly high profit during that year and consequently an excessive tax bill. The business owner had no idea what his tax bill was going to be. But, he did know it would be high and he was worried.
Knowing what your business will be paying in taxes does not have to be a big surprise and a cause to lose sleep over. The book, The Danger Zone, refers to this as a “Black Cloud” hanging over the heads of most business owners causing them concern 24/7, 365. The Danger Zone goes on to say that, “Many [Business Owners] spend too much energy worrying about the amount of money they will owe the IRS on April 15th.” Does this describe you?
Fortunately, there is a solution to this problem. If you are a business owner you will sleep better at night if you will find a competent person and delegate the following to this person:
- Give you accurate financial statements
- Give you timely financial statements
- Calculate your income taxes monthly
- Have the calculations verified quarterly from your independent CPA
If this is not being done in your business, then you too have this “April 15th Black Cloud” troubling you. You need the help of a part-time CFO. You need a B2B CFO ©. You need us. We can help you. If you would like to learn about how B2B CFO © can help you, contact Barry Tassin. Barry’s email address is: email@example.com.