Small business owners: while you are busy strategizing ways to build revenue and lower costs, are your accountants or financial advisors compiling reports that you will ultimately never read? Do you follow your preferences and leave the number crunching to the manager of your finances? Heads up – you need to actively participate in the understanding of your finances, even if you don’t like doing it.
Imagine your deepest regrets when you are being charged with tax evasion. You throw your hands up in the air at such an injustice. Doesn’t the government realize that they are charging the wrong person? It is really your financial advisor that got you into this tax mess! You trusted them to lawfully manage your finances, and they should be held accountable, not you. Unfortunately, your best friend during tax season is not going to be your cellmate in federal prison.
Everyday we see celebrities making the news headlines for not paying their taxes. Just within the last week, singer Lauryn Hill began her 3-month sentence in federal prison for 3 counts of tax evasion. Football player Terrell Owens recently faced a lien from the IRS for tax debt that he claimed was his financial advisor’s fault. Fame and fortune did not protect either Hill or Owens, and there is undoubtedly a common takeaway from all of this. Blaming your financial advisor for negligence is not a feasible defense against tax evasion charges.
Whether you are a rising entrepreneur or an established business owner, keeping up with your finances is your responsibility. It is also in your businesses’ best interest to make decisions based on financial data. Having a financial advisor or accountant to keep track of the numbers is perfectly okay. However, it is up to you to make an effort to understand the financial health of your company. Short summaries of financial data from your advisors can go a long way. In taking responsibility, you are ultimately protecting yourself from winding up in court for financial crimes that you will not be able to blame on your advisor.
Bottom-line: take ownership of your finances.