60: Your Bank Account Balance Does Not Equal Your Net Income Whether You Are Starting A Business, You Are Self-Employed, A Solopreneur, Entrepreneur, Business Owner, Bookkeeper Or Virtual Assistant

2021-12-01

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We are coming to the end of another year and it’s time to really look closely at your finances so that you are prepared when it comes time to file your taxes. Today I am talking about a common misconception when it comes to figuring out what your taxable income is. Many business owners will take a look at their business bank account and think this is the number they will need to pay their taxes on, but this is not accurate, and it causes a lot of problems when it comes down to calculating taxes owed on taxable income, especially if that bank account balance is lower than the actual net income. This can bring about a large tax liability that you may not be ready for. I’ve heard many times that business owners don’t think they will owe taxes because they only have about a small dollar amount in their bank account. This in theory seems like it should be the answer, but you’ll find out today what can cause this number to not match what your true profit and loss or net income amount is. It doesn't matter if you are using a computerized bookkeeping system such as QuickBooks, Xero, Wave or Freshbooks or a manual spreadsheet using Excel or Google Sheets, you still need to get your net income to prepare your tax return. Whether you are just getting started with your business, you are a self-employed, a solopreneur, entrepreneur, small business owner, remote virtual online bookkeeper, virtual assistant or VA, you really want to pay attention to this episode, so you don’t fall into this same belief. I want to make sure that you are as prepared as possible for filing your taxes and you don’t find any surprises when you figure out what your tax consequences are for the year…

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