The year was 2006 and I had hit a $1,000,000 in revenue for the first time. As you can imagine, I was thrilled to have reached that magic business number that so many strive for, but part of me was terrified because I knew that I had done it with a broken business foundation and at some point that would catch up with me.
You see, I hit a million in revenue by focusing all my energy on sales and marketing.
Even though I was a lawyer, I didn’t have my legal, insurance, financial and tax systems lined up. And, truth be told, I didn’t even really know what I needed to have in place.
If you’d like, watch a video where I share each of the $1,000,000 worth of mistakes that made up my broken business foundation and how I fixed them one by one, you can check it out here.
I knew I would be facing a big tax bill in April of 2007, but I didn’t think much about it as I was so focused on the sales and marketing side of my business and, frankly, I didn’t really know there was anything I could do about it.
Each month, my bookkeeper would put reports on my chair and I would glance at them, but I didn’t really know what I was looking at or what I was looking for, so I just tossed them into the stack of papers on my desk to look at later. Of course, later never came.
The big, bad news came a few months later when my CPA contacted me and told me that I had $105,000 due to the IRS that year. $105,000 that I didn’t have.
I had to take out a loan to pay my taxes. Back in 2007, taking out a loan was fairly simple as the banks were lending and I had a great credit score, so I did it, but it hurt.
And, today, getting a loan isn’t quite so easy. (If you have a big tax bill you can’t pay this year and you cannot get a loan to pay it, look into payment plans with the IRS — they’ll loan you the money. Or consider whether you may need to work with someone to negotiate down your tax debt. Via our Eyes Wide Open membership, we have trusted providers who can do this for you.)
The worst part was that once I made the commitment to get my legal, insurance, financial and tax systems handled and learn what I didn’t know about how to build a solid foundation beneath my business, I discovered I could have decreased my tax bill by at least $50,000, if I had planned in advance.
That would have been an additional $50,000 in my pocket, which I could have used for my kids’ private school tuition, a trip to Bali with the family, or re-invested back into the business.
But, back then, I didn’t even know how to ask my accountant the right questions. And I knew my bookkeeper wasn’t handling things the right way, but I didn’t know what handling things the right way even meant. So, I paid big time. (We’ll be offering a training for our members later this year on how to work with your bookkeeper the eyes wide open way, watch for it.)
For those of you who are facing a big tax payment this April, first of all congratulations. I say congratulations because it means you have figured out how to bring in the money. That’s great news and before you go beating yourself up for overpaying the IRS, congratulate yourself for knowing that you’ve got one of the hardest parts of business down — bringing in the cash flow.
Now, commit to doing things differently next year. If you want to keep bringing in the big money, it’s time to learn how to create the foundation to hold it all, otherwise, you’ll be likely to lose it just like I did and have to start over from scratch. Stay tuned here for some resources we’ll be sharing with you next week to support you.
Or start here and watch my video on the $1,000,000 worth of mistakes I made while building my businesses the first go round.
If you are ignoring your taxes or getting a refund this year (because you are still a W-2 employee), it’s time to make a shift and start focusing on how you can step up your personal responsibility for how you earn your income and what you do with the money, when you do.
Ignorance is not bliss. You can step into personal sovereignty and full control over your financial future by implementing the entrepreneurial principles we teach here at Eyes Wide Open (even if you do work for someone else).
I want that for you. And I know you can have it, if you choose to build your life and income awake, aware and on your own terms — with your eyes wide open.
For years, I built my life and business with my eyes squeezed shut, ignoring so much of what I knew was an issue because I couldn’t face it. I didn’t know how to face it. Simply, I was scared.
That’s why I’ve created Eyes Wide Open … to support you in learning, growing and evolving by facing the scariest parts of life and business with open eyes and an open heart. It’s all here for you.
With love beyond the beyond,
PS — soon I’ll share with you what happened when I had a big tax audit in 2007 and how I handled it in such a way that I ended up building my second million dollar business as a result. Yep, I turned a terrifying tax audit into a million dollar business. If you want to hear how, make sure to read tomorrow’s post.