Tawny Johnson CPB Blog

As a business owner, unless your business is accounting, bookkeeping is usually the last item on your to-do list. But is ignoring your company’s finances wreaking havoc on your business? According to an Entrepreneur Magazine article, “Entrepreneurs who hire accounting help usually discover they weren’t doing nearly as well on their own as they thought they were.” Here are some reasons why smart business owners hire experienced bookkeepers to manage the back end of their companies: Entrepreneurs typically end up spending more money with their tax accountants at year-end due to messy books. Business owners risk breaking the law and accumulating hundreds of dollars in IRS fines and penalties simply becau…

Business owners, do you really need to keep all those receipts? The short answer is: YES. As a small business owner, you're constantly making purchases to keep things running smoothly. And let’s be honest—most of us pay with a debit or credit card. Because really, who even uses cash anymore in 2024? So yes, your transactions show up on your credit card or bank statement. But here's the problem: bank statements alone are not enough to prove your expense qualifies as a business deduction. Here’s why receipts matter: Let’s say you spend $375 at Costco. Your bank statement just shows a charge to Costco. But the IRS can’t tell whether you bought office supplies or a pallet of tequila. …

In my now 17 years in business, I’ve learned countless lessons—about myself, about entrepreneurship, and about the realities of growing something meaningful from the ground up. I’ve discovered what I’m truly good at, where I still struggle, what I love, and what I’d rather never do again. Here’s my advice to fellow entrepreneurs: Don’t be afraid to venture out and start something new—even if you don’t have all the answers. Be willing to figure it out as you go. Growth comes through experience. Step outside your comfort zone—this is where true transformation happens. And when you make mistakes (because you will)… learn from them, fix what needs fixing, apologize if necessary, and move forward. G…

Tax credits and tax deductions are powerful tools to reduce how much you owe the IRS—but they work very differently. Understanding the difference can significantly impact your loan eligibility and tax planning strategy. Here’s the difference: Tax Deductions lower your taxable income. Tax Credits reduce the actual amount of tax you owe. This is a critical distinction, especially when you're applying for loans. Deductions reduce your reported income, which can affect how much you're approved to borrow. Credits, on the other hand, lower your taxes without touching your income figure. Let’s break it down: Income: $50,000 Tax Rate: 20% Tax Deduction of $10,000 lowers taxable income to $…

Hiring your children to work in your small business can be a smart move for both family and finances. Not only does it teach them the value of a hard-earned dollar, but their compensation may also be tax deductible, reducing your overall business taxable income. Here are some important things to consider: Their compensation must be reasonable and in line with their age, education, and experience. If your child’s title is “manager,” ensure they are genuinely performing managerial duties. Avoid overpaying for underqualified tasks. The IRS may disallow deductions if, for example, you pay executive-level wages for sweeping floors. When done correctly, employing your kids can be a great way to t…

Often overlooked, receipt keeping is a critical part of accurate small business bookkeeping. Receipts provide the most direct and acceptable support for every entry recorded in your financial records and tax returns. In the event of an IRS audit, your business must show documentation proving not just the amount paid—but that the expense was a qualified business expense. Many business owners mistakenly assume that bank or credit card statements are sufficient. However, these statements often lack the level of detail needed. The IRS may disallow expenses that don’t include full itemization or proof of business purpose. The solution? Save itemized receipts and annotate them when necessary. A simple receipt with a few notes c…