---

Guest post by: Kate Lister Become an Author

Tweet

---

---

If you're like many small business owners, you're glad to have tax day behind you. Even if you did file an extension, you had to figure out what you made (or didn't) and that's usually a major pain.

For many, tax time is an exercise in creativity. How much can I get away with before the Uncle Sam catches on. A few years back we needed a new accountant for our air tour business. One we talked to, a former I.R.S. agent, said to us, ““Some business owners want to sleep well, others want to eat well.” Which are you?””

What he was telling us was that we were talking to the wrong guy if we wanted to cheat on our taxes. We knew that if we wanted to get a good night’s sleep on the eve of an I.R.S. audit, we’d come to the right place. In the ‘been there, done that’ sense we knew the I.R.S. philosophy was ‘guilty until you can prove yourself innocent,’ and a good accountant with insider knowledge was worth his weight in gold–maybe literally.

It’s all too easy to try to save taxes by understating your income, particularly if you run a cash business. Likewise, it’s tempting to deduct non-business expenses -- who's to know, right. Wrong, and a really good accountant will advise against it.

But if I.R.S. audit worries aren’’t enough to keep you up at night, consider that understating your business profit will handicap your ability to raise money for the company. Lenders and investors won’’t be amused when you show them your tax reports and than add, with a wink, that they really don’t show all your income. Dishonest business practices, no matter how good the real numbers may look, don’t make you a good investment.

In addition, while you may eat well in the short run, when it comes time to sell your business, you’’ll find your plate far from full. That’’s because businesses typically sell for a multiple of net income. So, if a home based businesses like yours sell for five times net, every understated dollar of profit will cost you five dollars when you sell.

All in all, I'd rather sleep well anyway. How 'bout you?

Related Articles

  The Detrimental Business Relationship: Are You Putting Yourself at Risk?
  Relationships: Cheating
  How to get IRS Help and Income Tax Relief for Individuals and Businesses Unable to Meet Tax Obligations
  HTML And It's Ups And Downs
  Find New Customers releases “7 Keys to B2B Marketing Success” - a new free "cheat sheet"
  Smashing Pedestals
  4 Great “Cheat Sheets” on B2B demand generation from Find New Customers – no registration needed
  You and Your SEO Content Writer - 5 Reasons You Should Break Up
  Cost Segregation Texas - Tax Deductions (Business Taxes)
  Lesson #4: Practice Moderation
  Tea in the Saucer
  My Perfect Online Business Review
  Do You Keep Using The Same Ineffective Search Engine Optimization Strategies?
  Business Ethics and Values Do Not Have Expiration Dates
  Outdoor Billboard Advertising - Working With City Hall
  Try Not To Be an Opportunist
  Nailing A TV Interview
  Can We Build Better Character?
  Be Alert About Wasting Time
  What Makes You Different?

Related Forum Posts

The Market Says
Re: Question of the week: Does free work?
Re: what position to request?
Re: outsourcing sales
Re: SEO and Ken Evoy

Share this article. Fund someone's dream.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Are You a Forced Entrepreneur?

Are You My Mentor

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.