Accountants, Accounting, and Accountability Part 2.  Listen to the audio as you continue reading.

Reading of the Blog with Commentary Audio Part 2. Listen to the audio as you read along with the blog.

Account means to bring things together for examination and planning as in reckoning.  Hence the reason accounting is associated with bookkeeping.  Bookkeeping is a major piece because it is the process of gathering the data for organizing (gathering and classifying), reporting (pulling information from the collected data to create a way to analyze.  Analyzing data is examining the information to gauge how to move forward.  So co-piloting as we read the maps with you.

Accountants also use the gauge to make sure we advise you on the best legit tax saving processes for you.  That will help you prepare for future spending.  And eventually the money is used for investments called the financial (the end as in leftover money or profit) piece of accounting.  Only at the end do we consider financial investment outside of the business.  The focus of accounting is on business operations and the best use of the income.  Your accountant is not a fund raiser.  We work with you to work with your income from operations as in sales.

The financial advisor comes after you have made a profit from earnings of income.  Then you can choose to invest the profit from outside financial investment into your business.  However, you will pay taxes on the investment income.  You can write off any reinvestment as owner contribution instead of sales.

“Accountants just want to tell me how to spend my money.”  Do you think that, or did you say that?

Well in a sense yes.  We are advising, not telling you have a choice, you must navigate spending that will increase your bottom line.  The goal is always to increase.  So, if spending on non-deductible expenses or operating hoping to get credits that you do not qualify to receive means you will pay more in taxes wouldn’t you like to know that ahead of time?  Now some things we cannot help such as tax regulations, tax laws, credit and deductions change every year.  So, something that was once a credit may not be a credit now.  So, we monitor those changes to help you see where you can spend that will increase your business as well as be a deduction.  We do not help you avoid taxes but help you to avoid paying more taxes than you should so you can spend where it is more beneficial.  Properly assessing tax deductions and credits will give you more control over your money to spend.  Perhaps you want to take more out of your business for personal use known as a salary or owner’s draw. After all is that not the reason you are in business ownership, so you have more control over your income? That comes from profit and can most certainly pay you. But you will need to save or prepare for taxes on the personal side. (Commentary)

“Business ownership means I do not pay taxes.”-Tax myth.

Business ownership means you do pay taxes the difference is taxes are not “withheld.”  You are responsible for calculating what you owe and paying what is called “self-employment taxes” or business income taxes.  (Commentary) The difference between submitting business taxes and withheld taxes is called profit. And business taxes mean that you can offset your taxes due with different types of deductions. Deductions are payments that you “write off” on your taxes.

What if I put all my profit into investments like…so here is a great start to a question that involves tax planning.  Most business owners believe they do not pay any taxes and sometimes that may be true, but it comes with lots of legit planning to make sure they qualify for credits and deductions.  Others just don’t report all their income and that will catch up with them later as that income is reported by other agencies.  Even if you accept checks that check is report by the bank.  If you accept cash, you may be able to go longer but your spending reflects income is coming from somewhere and especially if you do not spend cash on purchases.