Enough Course

How my $100,000 tax bill helps you

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.

How my $100,000 tax bill helps you

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,

Ali

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.

Tax refund, big payment or ignoring it altogether? My best strategies…

Tax time here in the US is just around the corner and you are either excited to be expecting (or have already received) a refund, stressed about paying or perhaps you are ignoring it altogether.

You can e-mail into [email protected] to let me know which category you are in and I’ll hit you back with some guidance specific to your situation.

My personal tax story is instructive for you, no matter which category you fall into.

I’ll be sharing some details over right here, so keep an eye out for my tax time insights.  Most importantly, I’ll be sharing the story of how I ended up with an unexpected $100,000 tax bill and how I handled it. Plus, what I did after I was audited that built me a $1,000,000+ business. Seriously, this is huge and applies in many areas of your life.

Today though, I want to share some tax time tips that could help you immediately:

 

  1. Tax time can be a wake up call to approach your finances with eyes wide open: see it that way and grow your income in alignment with your life.

Looking at the numbers of my life and business was terrifying for years. Rather than paying attention (which felt either obsessive or overwhelming), I decided I would just make more money so I didn’t have to really pay attention.  

That’s one strategy I see a lot of entrepreneurs who are scared of their numbers using and while it can work for a while, it will ultimately backfire on you and result in extremely costly mistakes, as it did for me.

The other option I see people using is to just ignore tax time altogether by making so little that filing taxes isn’t necessary.

Either of these options is not in alignment with the truth of who you are. Making so little that filing taxes isn’t necessary or making so much that you think you can just pay in advance for your mistakes are both avoidance strategies that take you away from the truth.

Face your taxes with eyes wide open, with regular monthly meetings with your bookkeeper (or yourself if you don’t have a bookkeeper yet), reconcile your books, categorize your expenses properly each month, and review your profit and loss — those are recipes for success.

If you don’t know how to do these things, hit reply and let us know. If there’s enough interest we’ll create a training.

There was a time I didn’t know how to do these things, so I just avoided it.  

Today, I have clean and clear systems to manage my financials that allow me to look clearly, use my numbers to tell the story of my business so I can make wise decisions and I can relax knowing I’m earning what I need, when I need it, on demand and there’s no tax time scrambling anymore.

 

  1. Use your refund wisely to invest in resources that create more in the world.

The other day, I supported one of my on-site team members to get his taxes done. He was going to go to H&R Block and they told him it would cost him $100 to do his taxes plus he would owe $300+ (because he is a 1099 independent contractor with us and that means he has to pay all of the taxes himself on his income).

I used Turbo Tax and deducted some of his expenses for him. We ended up getting him a $300+ refund from the taxes he paid via his W-2 job.

So I asked him, how are you going to use this money?

He told me he was going to buy parts for his car so he could make it even more tricked out.

A part of me cried inside. That’s consumerism at it’s finest.

Investing in tricking out his car isn’t going to create more of anything in his life or the world.

Instead, he could be using the money to invest in gaining a new skill that he will be able to use in service to creating more in the world.

I invite you right now to consider where you might be using your resources to consume more rather than to create more and what you can do to shift that with your very next investment, especially your tax time refund, if you are getting one.

 

  1. Don’t beat yourself up, rather commit to make changes and learn, grow and evolve.

Remember, we learn by making mistakes. Every challenge (including the challenge of managing the financials of your life with your eyes wide open) is your greatest opportunity to be more of who you really are. And you get to choose that in each moment.

Don’t beat yourself up. Trust that you are being shown exactly what you need to learn next. Our purpose here at Eyes Wide Open is to lovingly support you to see what you may have been missing up until now.

I hope these tax time tips have showed you how you can use even the most practical of life experiences to expand your consciousness and live your life awake, aware and on your terms.

With eyes and heart wide open,

Ali

 

PS — We started our Enough Course yesterday, April 6th. Everyone who attended had huge ah-ha’s and breakthroughs on their own awareness of what they have and what they actually need to have the life they really want. It’s not too late to join us for the rest of the sessions. If you would like to consider whether it’s right for you, send us a note ([email protected]) and let us know so we can send you a recording of the first session and you can check it out and see if it’s your right next step.