Business Owner’s…I am talking to you! Tis the season for that phone call from your CPA that says “Get ready to write those checks to the IRS and the STATE for the profit that you’re showing!”
Your immediate response, with red face and heart pounding through your chest is, “WHAT?!?! I DON’T HAVE A PROFIT! I HAVE NO CASH IN MY BANK ACCOUNT. HOW CAN I HAVE A PROFIT? You did something wrong on my tax return!”
To which your CPA gently replies, “No I’m sorry, I didn’t do anything wrong.”
Confused and dazed about your situation, you hang up feeling sick to your stomach because cash flow probably isn’t warranting you to pay this new found “bill” on time.
Why does this happen? How does this happen?
Because we are NORMAL! As business owners we are consumed with making money, paying payroll, paying bills, creating sales and generating wealth, that’s how.
Here’s the thing that most entrepreneurs have to learn the hard way. Cash in the bank is not necessarily PROFIT or lack of PROFIT.
It does get a bit confusing but there are payments that will hit cash and not reduce your profit. Let me give you a few examples:
If this is too confusing, don’t worry, lol, again you are NORMAL! This is your CPA’s lane. Let her/him explain this to you further.
Go to http://talktobecky.com and let’s CHAT!
I hoped this served you. My intention was to show you that even though you make payments through your checking account, not everything is 100% deductible, thus the difference between cash in bank and your profit!
Have a fantastic day! Until next time…