I had a client some years ago who had a very cool business, and one of their core principals was that they only hired Veterans. I liked them a lot and enjoyed working with my contact person (let’s call her Joy).
Now, they had come on as a new client at the start of the year and the first thing we did for them was prepare 1099’s. Easy enough, except that they had never gotten W-9’s from their vendors and so had no way to know if they needed to create a 1099 and no tax ID information to use if they did. Joy jumped right into the task. She contacted all her vendors, gave them the appropriate paperwork and kept up the reminders until they returned it to her. But you know what happened? Tons of those 1099’s went out late anyway, because the vendors weren’t particularly great about returning the information to Joy. It was stressful for both of us, a little confusing when she faxed me the same W-9 more than once, and then there were penalties for late filing. Joy did a great job, but she didn’t know this task needed to be done much sooner so that there was time to finish and avoid the penalties.
Lots of things in the world of tax, bookkeeping, payroll, financial planning, retirement, etc. are like that. When it’s crunch time, it’s too late to take the great deduction you could have had, or set aside the money for the tax bill, or correct your employee’s address in the payroll system. When you sell the business you pay too much in taxes because it wasn’t structured correctly early on.
Planning isn’t just helpful for dinner, it’s crucial for success in business and personal finances.
