Bert Doerhoff CPA, Special for USDR
So many times a business owner thinks they have to buy something because if they don’t they will “get killed in taxes”. Step back and separate the hype from reality. The government has always set tax policy to reward certain types of behavior and that isn’t always good for the small business owner. The reality is the top tax rate is just under 40%. That means when small business spends $100 on something to save taxes it only saves the business owner $40 in taxes and the other $60 has to come out of profits.
What the business owner should do is ask what will help the business be the most profitable? If the business won’t increase profits by trading the old truck that is still dependable then trading trucks just gives the owner a nice truck but less cash. It is so easy to spend money and yes it saves taxes but the end result is the business that spends enough to owe no taxes is generally broke.
The business owner should never lose site of the fact that profit is king regardless of how dysfunctional government can make things for business. It is critical to understand the tax law and make smart decisions that minimize taxes but keep in mind the need to grow the business and someday be able to retire.
Simply put, make smart decisions first. The business owner should outsource non creative duties to others so the owner can spend time creating value in the business rather than reacting to government.
Bert Doerhoff CPA works closely with the small business owners to minimize income tax and fill the gaps so the owner has more time to work on the customer centered core services. He can outsource all functions of their entire accounting department from bookkeeping thru CFO services. The CPA firm also has multiple Quickbooks advisors to help clients maximize the benefits provided by their accounting system. Bert is also co-author of Six Steps to Small Business Success available on Amazon.