Get Ahead of Your Tax Bill Instead of Trying to Catch Up

Grant sees it every year: a business that prints money, and a tax bill nobody planned for.

“Why do successful business owners end up with tax bills they can't pay?”

The short answer

Get ahead of your tax bill instead of trying to catch up to it. That takes a plan and regular conversations with your tax advisor throughout the year.

What I see every year

I've seen business owners with absolute money-making machines, generating a million dollars a year, who never budget for their tax bill. I've seen people making a million dollars a year who are $600,000 behind on back taxes.

I've seen people earning $400,000, $500,000, $600,000 a year who still end up with a tax bill they can't pay, year after year. That liability keeps holding them back.

Why it happens

Too many business owners focus only on making money. Nothing wrong with that. But eventually you have to figure out what you'll owe Uncle Sam.

The biggest mistake is not tax planning and not talking to anyone. Many owners built their business on their own and got it to a great place, but forgot there's a step that takes a specialist. Reach out. Double-check.

Too often, business owners make great money with no plan for taxes, then get hit with a $100,000, $150,000 or $200,000 bill they weren't ready for.

How to get ahead of it

Have a plan. Talk to your tax advisor throughout the year and ask: How can I lower this liability? Should I change my entity structure? Can I use depreciation? Should I invest in real estate?

With a plan, you can put a lot of this behind you. Get ahead of your tax bill instead of trying to catch up to it.