Episode 9: TurboCharge Your Business –
13 Weeks to Financial Literacy IBGR Network
Welcome to TurboCharge Your Business, a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective.
I’m Patty Lawrence: founder of TurboExecs, money finder, consulting CFO, and right hand to growth-minded CEO’s. This season is called 13 Weeks to Financial Literacy and over the course of the season, I’m teaching you everything you need to know to take your business from confused and chaotic to strategically growing with you in the driver’s seat. Before we get into this episode, you can reach me at turboexecs.com.
CASH FLOW VERSUS PROFIT (SHOW ME THE MONEY!)
Today’s show is all about cash. By the end of our time together, you’ll gain an understanding of why cash is king in your business!
Operating Profit vs Tax Return
Cash Flow vs. Profit: Operating Profit vs Tax Return
Our focus at TurboExecs is making business owners aware of how they can make more money and where it may be hiding in their business. My hope for you is that you make as much money as you possibly can – as much operating profit as you can.
Operating profit translates into cash flow, because operating profit drives cash flow. What does that have to do with your tax return? Well, the more profit you make, the more tax liability you may have on your tax return.
I’m not a tax professional, but there are tax professionals out there who are going to give you the best and most personalized tax advice. I work with people like that all the time, so I know they’re out there and they’re there to serve you. I invite you to seek them out. I’ll give you ideas and you can take those ideas and concepts and run them by your tax professional.
What I will tell you is that your tax return is what you ultimately have to pay the IRS from, in addition to any state and local tax obligations. Those are the drivers, but your P&L statement is the starting point. Why does that matter? It makes a lot of difference what you have in there and the decisions you make in your operating profit versus your tax return.
There are some end of year tax maneuvers we discussed in the last episode that can lower your taxes. If you’re making those choices, it’s important that:
- We try to get you as high operating profit as possible.
- We make decisions for the business that won’t impact you as a going concern (i.e. that won’t put you out of business, interrupt your ability to continue making operating profit, etc.).
You need to make these decisions with a couple of tools in front of you:
- Your projected full year P&L
- Your cash position at the end of the year
Whatever you choose is going to carry forward and have a ripple effect into the future. It’s either going to harm you or help you align with your mission, vision, and values. If a decision gets you a deduction on your tax return but makes you worse off than you were before, it’s not worth doing. The juice isn’t worth the squeeze.
Let’s be very cognizant of what’s being proposed to us and what the benefits are. Ask questions, ask why. Be curious about what the impact could be. That’s the best thing you can do and the best way you can protect yourself, your company, and your operating profit going forward.
TurboCharge Your Business is a show for business owners who are tired of just working IN the nuts and bolts of their businesses and ready to work ON the business itself from a big-picture, growth-oriented, strategic perspective.
Listen to TurboCharge Your Business on the International Business Growth Network or wherever you get podcasts and gain access to even more great resources at https://turboexecs.com/turbocharge.
Patty Lawrence is a money finder, consulting CFO, right hand to growth-minded CEOs, and founder of TurboExecs. At TurboExecs, she works with $2M+ professional services and non-profit organizations that struggle to get the timely & accurate financial reports they need to function, often because one person holds this information hostage or lacks the skills required to do the work.
Through outsourced accounting and CFO services, she and her team reveal the story behind the numbers so leaders confidently can make data-driven decisions that allow them to leap forward, trusting they have the team and finances in place for manageable, profitable growth. As a result, TurboExecs’ clients typically increase the bottom line by at least 15% and feel in full control of their finances and results.
Get more business insights on TurboCharge Your Business
A show for business owners who are tired of just working in the nuts and bolts of their businesses and ready to work on the business itself from a big-picture, growth-oriented, strategic perspective.