Taxes are like a fungus. They hide in the dark corners of your financial statements, and eat up your precious cash flow.
If left untreated, taxes grow rapidly and consume everything in their path.
Don’t let this happen in your beer business.
Taxes come in many shapes and sizes – income tax, payroll tax, sales and use tax, property tax, beer tax, etc.
The key to combat all of these taxes is to actively manage them.
This sounds simple, but it’s rarely done. Most folks do not like taxes, and they don’t like dealing with them. It’s easier to complain, and write the check to the tax man.
In order to reduce taxes, and treat the fungus, you need to actively manage your tax obligations.
In this post we’ll cover three steps to reduce taxes. If you want a deeper dive, check out the Beer Business Finance Tax Reduction Course in the member area.
3 Steps to Reduce Beer Business Taxes
- Get a basic understanding of where taxes live
- Measure and manage your tax expenses
- Meet with your tax person and advocate for tax reduction
Learn where taxes live
The first step to treat the tax fungus is to understand where it lives and how it grows.
For example, payroll taxes are made up of medicare, social security and unemployment taxes. As payroll goes up, so do these expenses. However, there are several ways to reduce payroll expense (without reducing employee pay) and therefore reduce the taxes.
Measure and manage tax expenses
Do you know how much you paid in taxes last year? Of course not, no one does unless they actively measure the expense.
You run an income statement every month and to see total beer costs, payroll and utilities expense. Run a report on taxes. Understand how much you are paying (or will be paying) so you know how big the expense is. Once you see how big the number is, you’ll be even more motivated to find ways to reduce it.
Taxes are often out of sight and out of mind. Measure them so you can keep them right in your line of sight every month.
Meet with your tax person…
No one likes going to the dentist, but you do it anyway. The one hour visit every six months is a small price to pay in order to keep the chompers healthy.
The dentist can save your teeth and gums, and the tax person can save your cash flow. But only if you push them to do so.
The key takeaway here – and this is really important – you have to be an advocate for tax reduction.
You have to follow the first two steps above and come to the tax meeting with information in hand: #1 here’s where we are incurring taxes and #2 here’s how much we are paying. Now, work together to find ways to reduce the tax expense.
Most tax folks are focused on tax compliance – making sure the tax return is done correctly and filed on time. You need to advocate for tax reduction. You need to learn where taxes live, measure tax expense, and then push your tax person to look for ways to reduce them.
Those taxes aren’t going to reduce themselves. Follow the 3 Steps to Reduce Brewery taxes. Treat the fungus before it’s too late.