Tax Day: Our Collective Moment of Financial ClarityApril 18, 2011
Some people think April 15th is an icky day. I see it as our collective moment of financial clarity. Tax day is the one day that we all know exactly how much our businesses earned, or didn’t earn, last year.
I hear a lot of people focus on their refund amount. From my perspective, that’s NOT the number you need to focus on. Leave that to your tax accountant. The number that an entrepreneur should focus on is the one that gives you absolute clarity about what your business truly earned.
Employees have financial clarity about their earnings. They know exactly what their hourly wage is. If your value in the workplace is $25/hour, you work for$25/hour. If, due to economic or other circumstances, you take a job at a lower wage, you are usually VERY clear that you are working for less than your value.
Entrepreneurs don’t often have the same clarity. We don’t get paystubs. We often pay ourselves inconsistently. We pay taxes from our business account, so we never get to see the equivalent of ‘gross wages.’ When our businesses need money, we funnel into them from our personal funds. And when our businesses are flush, we sometimes plunder them.
Employees have clarity about time too. A full time employee works 2,080 hours a year. Those that work more, or less, know it. Entrepreneurs don’t have that same clarity. Some of us come in early, stay late, go to evening networking meetings and work weekends. Others spend half of their days doing laundry, running personal errands and picking up kids. When they look back on their week with honesty they they’ve only worked 20 hours.
- I believe there is great power in simplifying financial data.
- I believe there is great power in putting pencil to paper.
- I believe there is great power in saying out loud to yourself and to a trusted adviser “I made $XX/hour last year.”
- And I believe there is great power in writing about your feelings about your earnings.
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