Janet Kaup – Gainesville Georgia Tax Expert Shares Common Questions From New Small Business Clients

The most common questions from new clients are rather sarcastic ones – “Am I going to jail for this?” or “Have you ever seen such a mess?”! On a serious note, she is commonly asked questions that boil down to a misunderstanding of the correlation between cash flow to net profit. “Many small business owners who have not yet grown their business to a level of an ‘enterprise’ have essentially grown themselves a job.”, says Janet.   They use the positive cash flow of the business to pay for the personal living expenses that their former salary paid when they were employed by someone else.   Rather than planning  and budgeting for the taxes, some business owners find themselves facing a year-end tax return upon which they will report a profitable business income which may trigger a tax balance.  So many people can be caught off guard by the “profit” and ask the question, “How can I have a profit when I don’t have any cash?”

Sometimes the answer to this question is difficult to express. Sometimes the answer is that the owner has built equity in the business which consumed the cash that they should have split between tax planning and equity building. This can happen when a business owner pays off debt or uses cash to pay for business assets that aren’t fully depreciable in the year (like certain autos or real estate) .  Sometimes the answer is more difficult.

Janet went on to say “By difficult, I mean awkward. By awkward, I mean personal. By personal, I mean that sometimes, the only answer is that the owner is living beyond their means. Generally speaking, if you can support your household with money earned from your business, you are PROFITABLE. If you are profitable, there will be taxes. Failing to properly plan for those taxes and adjust your family budget to your after-tax income is a nightmare cycle of living for too many entrepreneurs. With a little planning, we can eliminate the uncertainty!”

There are many other questions that are also asked, and Janet encourages all small business owners to seek the advice of a accounting and tax professional.  The rules are constantly changing and hiring an expert often saves both money and your sanity.   Janet added, “The work that we do is not uncommon work.   There are plenty of tax accountants out there. There are also plenty of payroll companies, bookkeepers, and consultants. What makes us different is the relationship behind the business. Our relationship extends beyond a Christmas card and a newsletter subscription. We take time with our clients to ask the important questions, and because we don’t bill by the hour, our clients can take time to make sure we hear the whole story.”

To learn more about Janet Kaup, visit: http://PadgettNGA.com