Classes for Small Business owners
From daveramsey.com on 30 Aug 2015
For the hard-driving, entrepreneurial small-business owner, dealing with their business’ finances can be the most challenging (and dreaded) task on their to-do list. They’re focused on growing their businesses, landing clients, and cranking out product. Taking time out to balance spreadsheets and fill out forms to pay their quarterly taxes or file their annual return seems like punishment. Even Dave, a numbers guy at heart, admits he hates doing the accounting for his business.
You too probably have a list of things you’d much rather do than taxes, but you can’t shirk your financial responsibilities and expect to be successful. So why not take the bull by the horns and get a jump on your taxes—quarterly or annual—right now?
Tax Burdens Grow in More Ways Than One
When your business is a one-person show, your accounting duties are relatively simple.
- Keep a separate checking account for your business and use it for business income and expenses only.
- Pay yourself your salary from this account and deposit 25% of your pay into a separate savings account for your quarterly estimated tax payments.
- When you file your annual tax return, you’ll pay your “self-employment tax, ” also known as Medicare and Social Security taxes.
But as soon as you hire one team member, taxes get way more complicated. In addition to keeping track of your own taxes as well as the income and outgo of your business, you’re now responsible for calculating payroll taxes, federal and state income taxes, and federal unemployment taxes for your fledgling team.
And we haven’t even talked about sales taxes for our friends in retail.
Tax Troubles Can Sink a Business—Fast
Is it any wonder then that bad money management—especially in the area of taxes—is one of the main reasons businesses fail each year? A recent Statistic Brain study of business start-ups shows that half of new businesses shut their doors after just four years. For nearly half of those, the major causes of failure were errors in record-keeping and non-payment of taxes.
The IRS is famous for charging steep interest and penalties on unpaid taxes, but that’s not the only way they can put you out of business. When Dave’s company was large enough for him to hire a bookkeeper, he handed off all his accounting duties and relied on the bookkeeper’s report that showed all the business’ accounts, including payroll taxes, were up-to-date.
Then, as Dave and his family were on a trip to Disney World, he got a call that the IRS was at his office, prepared to padlock the doors due to unpaid payroll taxes. Dave, a big believer in being prepared for emergencies, had enough money in savings to cover the tax bill and keep the doors open. But most business owners are not in a position to cover an expense like that.
Hiring a Pro Is the Way to Go
Dave’s experience might lead you to believe you should never trust anyone else to handle your business’ finances. But that’s not the case. As a business owner, you know your time is often better spent concentrating on the day-to-day tasks of building the business. Relying on an expert to handle the bookkeeping and tax responsibilities is a smart way to make that happen.