Donna Genie (speaker) explains that organizing and cleaning up business financial records prevents costly tax mistakes. She tells a concrete anecdote of an entrepreneur whose accounting-entry errors caused his income to be overstated and resulted in over $40,000 in extra taxes, illustrating the stakes of 'garbage in, garbage out.'
Over $40,000
Did you know that just organizing your finances can save you a ton of money? Yep, that's right. It's not just about the neatness. It's about how you record things and the tax savings that come along with that. Let me tell you a quick story. We had an entrepreneur approach us who'd been doing his own books in his first year of business, kind of running it on a shoestring. But things ended up going pretty well. We were getting ready to help him employ some new systems and looking through and cleaning up his past records. He had filed his tax returns with a tax preparer prior to working with us, so he brought those along with us. They thought they had everything under control, but there were a few misplaced clicks here and there, and that accounting software led to some big mistakes. Now, software doesn't make the mistakes. It's the way you put it in. So garbage in, garbage out. Guess what? These little errors along the way caused his income to be overstated and cost him over $40,000 in taxes. As I mentioned, his business did take off pretty quickly. So the timing of which he thought he had everything under control. And then by the end of the year, things were going really well. That led to a recipe for disaster here.
