Happy Tax Day to You
Yes, April 15 carries a horrible connotation. Pay the piper. Cover the bill. Fork it over. But let’s look at it another way. To me, paying income tax is the cost of living in our country. (We are not going to discuss if the tax revenue is well spent or not. ) Paying tax says, hey–I had a good year–or even better–I had a great year! Why do we, as independent wage earners feel we can evade taxes that people who work and get w-2’s have to pay in full?
For those of you who have a suitcase of cash somewhere…how do you sleep at night? I would stay awake waiting for the letter from the IRS. No amount of savings could make that enjoyable for me.
There is a difference between user fees that target small businesses and income taxes. There are way too many of these fees, from sign permits for your showroom, to getting a building permit to replace a toilet in your shop. These are way out of control at the local and state level, and there is no good answer on how to control or limit them. Maybe cut the spending of every government bureaucracy, or make the spending responsible with oversight by a small business person, and we would save enough to get rid of the fees every business owner feels.
You are a glass shop owner and a customer pays you with a crisp new hundred dollar bill. It is so tempting to put this in your pocket. I know. But look around. Your employees will see this at one time or another. And all it takes is one upset employee to drop that dime to the IRS and you have costs and grief far exceeding the Ben Franklin you saved. If you have a profit sharing plan, an employee will remember that money and ask if it is included in this year’s distribution. I would if I were your employee. How does your bookkeeper reconcile paying bills, if the cash is never brought through the books? Your employees will know what this is…and wonder when do they get their share. If they see you sneak a hundred, then is it OK for them to take a ten for a small screen on Saturday afternoon? After all, they have seen you do it.
But if they see you put a ten dollar bill in the till for a screen repair, they will too. How much do you loose through this shrinkage? Probably more than you save in your tax bill.
Talk with your accountant…he/she will show you how much each path benefits you. And the IRS does know that most small cash businesses, like ours, get creative on their accounting. It is probably not enough to trigger an audit, but if something else pops that red flag, be prepared for the worst.