I hear the struggles business owners face: worries, fears, hesitations, and uncertainty. I see and I understand the root problem around these 3 common fears. I encounter statements like these from business owners and have designed my business around solving them. These fears are valid and common, and should be paid attention to when making decisions. But I also want to assure you safety, peace of mind, accuracy, and sound advice when you talk to me.
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“I am scared of the IRS”
Having the thought of an auditor come to the door may scare the daylights out of you as a business owner. To others, they LOVE the idea of challenging an auditor on taxes. Why the difference??
Some people refer to this difference as risk tolerance and it’s applicable in many situations of tax questions. Risk tolerance is the level of risk an individual is comfortable with in certain situations. For example, a business owner may be willing to pay more than what he owes in taxes just so the IRS does not ask questions, while another person will seemingly underpay his taxes to the IRS because he interprets his reasoning as obeying tax law, even if it means risking a visit from the IRS.
Taxes are subject to interpretation and interpretations can be correct and incorrect. The only thing an auditor sees is numbers on a return and those supporting financial statements — they do not see the reasoning or events that cause these numbers. A business owner may report their own taxes if he is comfortable, or he may choose to pay a tax preparer. A great tax preparer will communicate options with you on your return, based on your risk tolerance, to choose the best course of action on types of write-offs and forms.
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“I don’t want to lose control”
The second fear you as a business owner may have with bookkeeping is losing control. The uniqueness of being a business owner is that you have control over every moving part. Potentially handing off bookkeeping tasks sounds blissful and time saving, but can be intimidating. Some believe if they are not entering the invoices, sales receipts, matching transactions, and payroll entries themselves, then someone else is going to mess it up.
To solve this, I believe there are two main components. The first solution is communication. A business owner and bookkeeper must communicate thoroughly their expectations and scope of work on tasks to “pass-off.” This is important for the initial contract but much more important in order to pass off a part of the business owner’s brain to the bookkeeper. Successfully doing this allows the bookkeeper to communicate with the business owner any problems, areas of improvement, or areas to sustain within the financial books.
The second solution I have is that a separate bookkeeper ensures an unbiased professional to oversee internal controls that prevent fraudulent activity. This means that separating financial duties allows multiple people to observe money moving, reducing conflict of interest and reducing the probability of fraud occurring within a company. Hiring a bookkeeper provides you more financial control in your business.
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“It seems like a waste of money”
Why would a business owner choose to spend money on a professional bookkeeper if it only takes a professional 5-10 hours a week for their books? The first understanding I have come to realize is that it is a universal standard that no one has enough time to do all their tasks on their to-do lists (including bookkeeping tasks!) This results in business owners rushing end-of-month tasks, quick Google searches for answers, and scrambling for paperwork. In the end this costs the owner much more damage in overlooked mistakes. Bookkeepers and tax professionals, if equipped with the proper training and experience, are driven to save the business MORE money than the investment into hiring a bookkeeper/tax professional. A great bookkeeper is seeking ways to cut unnecessary costs, triple checking for incorrect charges to the bank account, and collecting accounts receivables. A great tax professional is seeking ways to save you double the amount that was paid for a tax preparer on your tax returns. Bookkeeping professionals and tax professionals are an investment, meaning there is an initial cost, but over the years it saves you more than you will ever end up paying them.
In conclusion, I understand and hear your fears. Bookkeeping and tax is not the only fear a business owner faces, but if it is one area that needs attention and improvement, I am here to listen to you. Let’s work on the organization and accuracy together.