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 consider how having a profit in your income with help with growth. Tax planning will help you spend on eligible tax deductions. Also, if you are taxed on a profit you will not feel the pain of taxes because you have prepared for a profit and save for taxes. Also depending on your business structure, you can determine you can estimate taxes. Don't be afraid of taxes because they are controllable expenses when you are proactive.
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. Planning will help you only pay the minimum amount of tax due and not a penny more. We overpay taxes when we do not track all expenses or have a 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 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 overspending. 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.