That title might sound like an obvious thing to say, but sometimes we need reminding of the obvious.

Nothing is certain but death and taxes, so the proverb goes.  Some things are inevitable and taxes are one of those things.

Nevertheless, it seems most people dislike paying taxes and many would like to avoid them at all costs.  I am sure all accountants sigh when yet another client says to them that they do not want to pay any tax.

The fact is if you want to make money from your business, which presumably you do otherwise you wouldn’t have started a business in the first place, then you will pay tax.

So why not look at paying taxes as a positive thing instead of a negative one?
As a sole trader how much profit would you need to make to not pay any tax?
In the current tax year (2012/13) and assuming you have no other income £8105, or £156 per week.

Not a lot is it when you consider what you could buy with that amount of money?

Wouldn’t you rather, for example double your profits to £16210?  You would pay tax on £8105, of 20%, that’s £1621 and national insurance of £912.

So now that leaves the amount in your pocket of £13677 or £263 per week.  Sounds better doesn’t it?  And you’ve paid tax.  But now you have over a £100 more per week to spend.

So, do you get the point?
If you don’t want to pay tax, fine, but it’s unlikely you will be making an income you can live on.

Taxes = Profits

Profits = A Good Thing

Lots of us fear our finances.  I once used to too.
We fear what our bank statements or the cash point slip will reveal about the state of our finances, about how little money we really have.
Rather than face up to it we allow ourselves to live in a state of nervousness, stress and denial.  We may feel better momentarily and breathe a sigh of relief when our bank card is accepted at Tesco, today anyway, but sooner or later we have to face up to our finances and deal with them.

Unfortunately business owners also behave in the same way, rather than face up to reality.   Though, of course, we are those self same business owners, aren’t we?
So, if we don’t manage our personal finances why would running a business make any difference to our behaviour?

Cashflow, or the lack of it, is the number one reason business start ups fail in such high numbers.

But I have a plan ….

Open a blank excel spreadsheet and in the first column type in all of your monthly income and expenses. Then use the columns to the right to represent separate weeks of the month and enter the expenses into the relevant columns according to when they are paid during the month.  Do the same with your income.
Then you can see where the likely flashpoints are – when your income that week may not be enough to cover your expenses.  This means you can immediately see when you will need to leave enough money in the bank to cover the expenses of the following week.

Sounds easy doesn’t it?
But I know how facing up to the reality of where your finances are really at, is extremely scary.
The payback is that once you have done it, the sense of relief and your new found knowledge is exhilarating or at the very least it stamps all over your fears and gives you something to build on.

Does that promise of payback give you the impetus to do your own spreadsheet?
Or would you give this job to your bookkeeper or your accountant? And if you did would you heed the results?
Would you keep up with the spreadsheet? Or would you ask your bookkeeper to do it?

This is the first step towards never having those fears again.
So will you do it?  Today? Tomorrow?
Then make a commitment to yourself to keep a regular check on them, you’ll be glad you did.

You can get my complimentary cashflow forecast spreadsheet by clicking here

 

 

Over the past 28 days I have been doing Rachel Elnaugh’s Business Alchemy course.  For £8, which is the price up to the end of August 2012, I didn’t need any convincing to join.  Various online friends have reported excellent results and certainly the regular daily videos have focussed my mind on various aspects of building a business. So much so that I intend to start from day 1 again tomorrow.

On the Day 26 video Rachel talked about how more women than men seem to struggle with technology, or lack of knowledge around technology, and she stressed how important it is that we get good at it, so that we can do simple things like putting a paypal button on our website.  This makes us more self reliant and empowered as a result.

As if taking this message on board, over at one of my favourite websites Entrepreneur Soul, Judith Morgan, herself a recent participant of Rachel’s course, together with her business partner Marion, decided to set up a private Facebook group for their loyal Entrepreneur Soul members. Despite the fact that they both recognised their lack of knowledge regarding all things Facebook, they decided to go ahead and do it anyway. Even though things didn’t quite go to plan, they’re not put off. Click here to read Judith telling the story.

So, what technology have you been avoiding learning about and implementing?
Seize the moment and do it now, you just never know what might happen to your business growth

 

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