What You Don’t Know Can Hurt You
[by Jenna Close]
When I first started my business, I made a costly bookkeeping mistake. I just didn’t realize it until 3 years later.
I decided to save money by doing all my accounting and tax forms myself. When it came time to pay taxes, I researched the appropriate forms for a General Partnership, (my type of business). Then, I sent everything in…everything except the State of California Partnership Form, which I didn’t bother with since General Partnerships have no tax obligation or filing fees.
Three years later my partner Jon and I were making a lot more money than when we started out, so we decided to hire an accountant. She informed us that even though we didn’t owe any state taxes for our first three years of being a partnership, we were supposed to file that State of California Partnership form anyway.
We back-filed for the years that we hadn’t sent it in and were subsequently fined $400 per year, even though the total amount we owed for those 3 years was $0. The $1200 lesson here is…even if you can’t afford to hire a bookkeeper or an accountant full time, put some money aside to consult one once a year. It’s worth the small fee in the long run.
Jenna Close‘s brother got all the family math genes. He’s an engineer at GE, she’s a commercial photographer who began cheating on multiplication tests in the 4th grade.
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Great advice, especially the idea of putting money aside for a consult once a year. That feels much more manageable at this stage in my career. Thanks!