Tax Tip Tuesday: Small Business Owner, Know Your Numbers?

Tax Tip Tuesday

Often when small business owners first open their doors, they have one simple goal: Make Money!

But owners are surprised to learn that you can make a lot of money without actually making a profit. How does that happen? It happens when you don’t know your numbers.  As Marcus Lemonis states, “If you don’t know your numbers, you don’t know your business.”

And why is it that some business owners don’t know their numbers?  Well, it is quite challenging to make money AND do all the other things to stay in tune with the financial operations of your business.

Business owners are very skilled at the service they offer or the product they sell.  Think of the expert electrician or the adept plumber or the excellent baker or whoever else you think of that is proficient at what they do.  They have a great product or service.  Unfortunately, often these experts have limited to no training on the financial side of running a business.

READ: Tax Tip Tuesday: Less Taxing Options to Pay for College

Many are unable to answer basic questions about their business such as what is your year-to-date profit?  What is the profit margin for your business?  Which top 3 products or services have the highest profit margin? What is your business’ current liability balance?  How much cash flow does it take each month to keep the business running?  What is you the average turn-around time on accounts receivable? And one of my favorite ones, what tax bracket is your business in?

Without knowing these answers, how can a business owner possibly make good financial business decisions?  And to add insult to injury, not knowing business financials has unfortunately caused many ugly tax surprises.

Not just to avoid an ugly tax surprise, but a good set of books enables better financial decisions in the business in general.  It reveals the true profit margin overall, by company, and by product or service type.  Knowing your numbers exposes when a price increase is necessary, what services are most profitable, and when an unprofitable service or product should be eliminated.

The problem is the lack of a system to track this information in order to have the data needed to make good business decision.  It is not a lack of intelligence.

To assist business owners with developing an informative and accurate system for tracking finances, we offer a 6-week Accounting BootCamp.   We work with the business owner to clean up the current accounting system or get a system set up so that the owner can have the information necessary to take control of their finances.  The next Boot Camp starts on May 24th.  The BootCamp teaches key accounting concepts AND provides opportunity for implementation into your own business.  Owners remain in the driver’s seat, but benefit from professional instruction and coaching from tax and accounting experts!  The cost for the 6-week program is $799. 

Get coached up and make 2022 a more informed, profitable year! Because, “If you don’t know your numbers, you don’t know your business.” – Marcus Lemonis 

For more information on Accounting BootCamp, visithttps://saunderstax.com/bootcamp.phpOther coaching services can be found athttps://saunderstax.com/mentor.php.

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