Twenty years ago, I had just finished my enlistment in the U.S. Army.
I enrolled in the accounting program at NC State University as a sophomore in college.
I had just finished my enlistment in the Army and was excited to finish my college degree.
Before I entered the Army, I had taken an introduction to business class and was fascinated with business.
While I was in the Army, I was diligent about saving my money, so when I got out of the Army I had built up a nice nest egg.
I knew that I wanted to have a career in business, so I had started my studies in accounting.
That fall, I learned that Colleen wanted to sell her commercial cleaning company.
I was intrigued by the opportunity and contacted her to learn more.
Terms of the sale made a lot of sense to me, and we started our negotiations.
Colleen was graduating from college. She had used her cleaning company to pay for her education.
Colleen had received a great job offer upon graduation and decided that it was time to sell her business.
I had just proposed to my girlfriend Angel and was excited about the future we would be starting together.
As it turned out, Angel had been working for Colleen the last few years.
Angel and I spent the next eight months working for Colleen, and in August of 2000, we purchased the business from Colleen.
It was an exciting time for us. We were making great money.
We only worked about 25 hours a week, and we were madly in love.
Believe it or not, I have very fond memories of cleaning toilets, emptying garbage cans, and vacuuming floors.
I decided to take a year off from college because I wanted to make sure that the business was running smoothly with the transition.
We worked mainly in the evenings, so it turned out that we had lots of time during the day to have fun.
One of the offices we cleaned was for Frank, who was a Certified Public Accountant.
During the spring Frank was often working late doing taxes, and from time to time we would strike up a conversation.
I really liked Frank, and I hired him to be my CPA.
One of the first pieces of advice most business owners receive is you need to find a good CPA.
Taxes are tricky for business owners, and it’s essential to get advice from someone who had an intimate knowledge of taxes.
The year 2000 ended, and things were great.
The business had been an excellent venture for Angel and me.
I had made more money with my business than I had ever made in my life.
Things were pretty exciting.
Then the time came to do my taxes.
I gave Frank all of my tax documents, and he started working on my tax return.
At the beginning of March, Frank finished my taxes and called me to his office.
I was looking forward to the meeting, and we sat down to review the tax returns.
That’s when I got the news. Or rather let me say it that’s when I got the BAD NEWS.
I owed $5,000 in taxes. I was shocked.
Not only that, but it was six weeks before April 15th. I didn’t have the money in my bank account to pay the tax bill.
What was I going to do?
How could it be that I owed that much money in taxes?
It turned out that I made a classic blunder that most people make when they start their businesses.
I had collected all the income from my customers, but I did not pay my quarterly estimated taxes.
I was simply uneducated.
My last job was as a soldier in the Army.
I got a W-2 every year, and taxes were withheld from my paycheck. Every year when it came to file my tax returns, I usually got a refund.
Owning a business was definitely different because I didn’t have an employer withholding taxes from my paycheck.
I left my meeting with Frank exasperated. What was I going to do?
How was I going to pay my tax bill? This was not what I wanted.
I’m not sure exactly how I did it, but I saved up all my money, and when April 15th, came I had the $5,000 I need to pay my tax bill.
I was determined that this situation would never happen to me again.
I wanted to make sure that I wasn’t caught at the end of the year with a big tax bill and not have money to pay it.
I started making my quarterly estimated tax payments and learning what I could to save money on taxes.
One thing I enjoyed about the cleaning business was running into my CPA Frank every month or so.
I told him that I was studying accounting, and someday I wanted to be a CPA.
We would strike up conversations, and he was always generous with advice.
I always enjoyed our conversations and was thankful for his insight.
A couple of years later when I got my accounting degree, Frank offered me my first job out of college preparing tax returns during tax season.
I accepted the job knowing this would be a great start to my accounting career.
I really loved that job. I was fascinated with preparing taxes.
I loved learning about how the tax law worked and seeing how the income tax return worked.