Business Owners #1 Cash Management Mistake!
Most Business owners wait until tax season to determine if a profit was earned. If your goal is to have $0 tax, change your goal. This is not an accomplishment. $0 taxes proves you mismanaged your money. Don’t let another month go by without knowing your financial positions. Know your numbers and know your cash outlook. Know the amount of money that goes in and out of your business each week or month? Most business owners do not know the amount of money that goes out the door each day.
Consider the size of your tax refund. Having a tax refund is not always a good thing. If you have a tax refund due to spending all of your money or submitting or withholding more taxes than are required, you over paid throughout the year. Open an account for taxes and save on your own. You will earn interest and you will be able to give yourself a faster refund without banking fees!
We use Tax Planning to analyze the most beneficial ways for you to spend your money. I don’t want you to think that spending is the enemy. We have to spend money to support our business but a successful business owner knows that having a spending plan is the best way to go. Tax planning gives you a window to earn more money and to maximize business deductions to reduce your taxable income. Paying taxes supports our society and is a part of earning income. However, planning will help you only pay the minimum amount of tax due and not a penny more. We over pay taxes when we do not track all expenses or have financial organization. We can not plan and grow our business when we do not know our cash flow.
Here’s are a couple of steps to help you start managing your cash:
Review your income sources: Do you have quality clients? Do you know the amount of income you receive? Plan additional methods to earn more income.
Review your expenses: Do you have unnecessary expenses. Cut unnecessary expenses or expenses that do not benefit or required for your business
Track spending each week: start with one week. Save receipts, track auto drafts, and cash spending and track this information in Accounting Software.
Plan for Taxes: Paying taxes is a part of life, Making money is the goal, don’t focus on $0 taxes by over spending. Spend wisely…it’s ok to have money in your business and to pay yourself.
Create a Cash Management Plan
Put the steps above into action to help you plan for the new season and seek an Accountant to advise you through the process.
Join me at a Profit First Webinar or at Total Wine to learn more about a Simple and Easy Cash Management System for the non-accountant. Or sign up for a Money Saver. We will hop on the phone and brain storm about how we can save money with spending and taxes in your business.
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