Finance & Bookkeeping

Tax authorities such as the Internal Revenue Service expect that you are in business to make a profit. It may be that you business incurs an operational loss, especially in the first year or two when starting a new business. The evidence of either a profit or loss, and the basis for filing tax returns, are your records.

Small business owners are required to keep detailed records for all business deposits and expenditures evidenced by business-related checking, savings and credit card statements. Also cash expenditures for the business must be maintained in records with receipts. Tax authorities expect business owners to adhere to “generally accepted accounting principles” by creating monthly, quarterly and annual financial statements. These statements and backup support the figures for tax returns for your business tax return and sometimes your personal tax return when you operate as a sole-proprietor.
 

We suggest you hire a bookkeeper to review your records on a monthly basis. Generally they will require your business checking and credit card statements and receipts for cash disbursements. You will need to copy them with all sales receipts for services and retail sold in order to tally your total sales income. The bookkeeper then fulfills the tougher task of placing your figures into order that meets “generally accepted accounting principles” expected by tax authorities.

Don’t forget that any cash you take from the business for personal use is taxable income and you must pay estimated taxes on those “draws” on a quarterly basis; you never wait till the end of the tax year! Groomers make serious mistakes handling personal draws from their businesses. Estimated taxes on those draws and the overall net operating income are major stumbling blocks for confused small business owners. There are costly penalties and interest associated with not filing estimated taxes properly or on time when a balance is due.

If for just one reason alone you hire the services of a bookkeeper it should be to maintain compliance with estimated taxes and payroll taxes if you hire employees. If you have employees, even one, there are additional tax reports for local, state and federal governments that must be adhered to perfectly to avoid severe repercussions. Remember, when you are handling government monies you withhold from employee paychecks they have little patience with mistakes. Use the services of a bookkeeper for payroll, and do what you best, groom. You may have to groom as few as 3 pets a month to pay for your bookkeeper. It is money wisely spent. You can sleep well at night knowing you have no compliance problems.

One of the best introductions to finance is our chapter dedicated to it in From Problems to Profits along with record keeping forms. The manual system is easily learned and gives you tremendous information on a daily basis that you can study not as a pet groomer, but as an owner/manager. If you follow the manual system and turnover the paperwork and records complete as we suggest, your bookkeeper can more readily prepare your monthly financial statements. Just as your time is money, so is that of a bookkeeper. If your books take less time, the savings should be yours.

Your local Chamber of Commerce, Small Business Administration, SCORE or Small Business Development Centers may offer classes specifically for new business owners. These classes introduce small business owners to recording keeping and tax requirements. It’s a great way to learn how to read your financial statements as well. If you have worked in management before you are probably aware that every month administration and management review financial records and look for what is working, and what is not. It’s no different for pet grooming business owners; it’s simply a matter of scale. We highly recommend you attend one.

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