Easy Cash-Flow Solutions to Assist with Estimated Income and Sales Tax Payments

Today, let’s talk about a question that comes up a lot among small and medium-sized business owners, and that is the question of how to make sure that their business has enough cash for the mandatory quarterly estimated tax payments or the monthly sales / use tax deposits.
My name is Alexander Larson. I am a certified public accountant with an accounting firm called Glasgow Knight Financial. I have over 20 years of accounting and tax preparation experience helping business owners organize their finances, automate their accounting and tax compliance and help them run efficient, well-informed businesses.
First things first--let’s set the record straight--your estimated quarterly Federal and state income taxes or the sales taxes that you collect from your customers are not yours to keep. Paying your individual and business income taxes is considered a civic duty and it is also a requirement of the Federal and state law. On the sales tax side, things are even more strict—your business is the vendor who acts as an agent on behalf of the state or local governments in collecting the sales tax due.
So, how can you, a business owner, ensure that these taxes are paid accurately and timely? We have a solution for you. Let me share it with you today.
When our clients ask us this question we recommend they reach out to their financial institution first, and open two business savings accounts. Most banks open business savings accounts without any monthly service fees. One of those accounts is designated for your business’ quarterly income taxes. The other one is for the sales tax collected from customers.
The next step is to change how you run your business’ cash flow. In the case of sales taxes, the solution is quite straightforward and that is deposit sales tax collected from customers to the business savings account earmarked for these purposes. In other words, when making a deposit at the end of the business day, do not comingle business receipts with sales tax collected from your customers. We have many cash-intensive clients who followed this advice with great success, including businesses such as restaurants, bars, movie theater operators, and even street food vendors. We  recommend this solution even to businesses who collect sales tax infrequently. 

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Easy Cash Flow Solutions To Assist With Estimated Income And Sales Tax Payments

Understatement of Net Income and What That Means for Small and Medium-Sized Businesses

Let’s talk about a subject many small and medium-sized business owners have to think about from time to time and that is the matter of minimization of taxable / reportable business income, or simply understatement of net income.

My name is Alexander Larson. I am a certified public accountant with an accounting firm called Glasgow Knight Financial. I have over 20 years of accounting and tax preparation experience helping business owners organize their finances, automate their accounting and tax compliance and help them run efficient, well-informed businesses.

Let’s begin by saying that there are plenty of resources out there on the legal aspects of understatement of net income and the distinction between tax avoidance and tax evasion. We are not attorneys, we are not rendering legal advice, and, frankly, that is not the point of today’s discussion.

As a financial professional I often receive questions from business owners asking me how much taxable income is “enough” for me to report. That is a loaded question. Tax optimization (or tax avoidance) taken to an extreme may cause some serious non-tax consequences that I want to talk about today.

The most obvious one is access (or shall we say, lack of access) to capital. Business tax returns and business financial statements are almost always used by banks, governments, private money lenders, and investors when it comes to matters of financing of and investing in businesses. Low net income or taxable income numbers are the main reason why many businesses are denied access to capital.

Another non-tax consequence is the lack of accurate financial statements that could be used to run an efficient, well-informed enterprise. Many businesses with distorted revenues, inaccurate inventory, overstated expenses, or even personal expenses charged to their business, deny themselves the use of a powerful business management tool – and that is the use of comparable financial statements and financial statement ratios that could help them make well-informed business decisions.

Finally, it’s the question of management’s integrity and trust. Earnings management that concerns itself with best accounting presentation rather than the best presentation of economic reality of the business backfires by killing off trust in management’s integrity or its ability to run an honest business. Lack of trust is cited as a #1 reason why joint ventures, partnerships, or business alliances fall apart.
So, where does Glasgow Knight come in?

Glasgow Knight Financial exists to bring order to people's financial lives, cause them to understand their finances (educate them about their finances), automate their accounting and tax compliance, savings and investments, help them generate ever-growing passive income, and transfer significant financial risks to the best insurers in the world.  

You can reach Glasgow Knight Financial for any of these needs by going to our website at www.glasgowknight.com.

Who we are in the world is solution-driven, trusted financial, accounting, tax and insurance advisors reimagining people’s financial well-being.
Thank you for your time today and will see you in our future videos.

Visit Us At:

Email: Clients@GlasgowKnight.com
Web: https://glasgowknight.com

Jacksonville:
1303 N Main St, Jacksonville, FL 32206, United States
https://www.google.com/maps?cid=14242087050163945525

Follow us on Twitter:
https://twitter.com/GlasgowKnight

Like us on Facebook: 
https://www.facebook.com/Glasgow-Knight-Financial-PLLC-110913208034843

Find us on SoundCloud:
https://soundcloud.com/glasgowknight

Subscribe to our YouTube Channel:
https://soundcloud.com/glasgowknight

Understatement Of Net Income And What That Means For Small And Medium Sized Businesses

Glasgow Knight Financial is a professional accounting and tax firm. We are certified public accountants, and financial and technology professionals who streamline the world by using systems, automation, and the power of a creative, rational mind. We do accounting, financial and tax reporting of our clients and prepare and compile financial statements for the clients of other accounting and tax professionals.