Money Myths and Mindsets
Money myths and mindsets are terms I often use when speaking about money blocks. Our money mindset determine the amount of money we choose to make and can make in our business as well as earn in our lives. What does this mean? Myths about taxes and the work involved in monitoring and tracking spending often deter business owners or independent contractors from moving forward.
1. Avoiding Taxes
2. Paying Taxes out of Fear
3. Making investments or purchases out of emotions
4. Not planning future purchases
5. Spending without a money plan.
Tax Planning, Cash Management, and Bookkeeping help you to avoid two business and cash management pitfalls. 1. Waiting until tax season to know your financial outlook and 2. Low or lost income and high ineffective spending.
Waiting until tax season to determine $0 taxes does not reflect a successful business. $0 tax reflects the business income is low or the business is over spending. If a business attempts to get a loan then $0 tax liability does not look well to the lending institution. However, if you owe a large tax balance the taxes due reflect a poor or ineffective spending plan. An effective spending plan is based on tax deductible spending and proper self employment taxes on money withdrawn from the business.
Your goal should to be to increase income and become an effective spender to lower or better manage your tax bill.
Consult with an Accountant to set up a bookkeeping system for you. The system does not have to be complex but effective to track income, receipts, expenses. The system should produced financial or money reports to determine your financial outlook of your business. Your receipts should be kept in a digital format to avoid the receipts that fade at the end of the year. And create a money plan for effective spending to create more money in your business and lower taxes.
Next newsletter, we will talk about paying taxes out of fear and making investments or purchases out of emotions. Did you just hire some one or lower your pricing because you felt sorry for them? Let’s talk about how that effects your income and taxes.
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