Category Archives: accounting issues

Tax coaching: how it works

My guiding theme with clients is empowerment: supporting the client to move beyond negative and even crippling stories about money, and come into a positive relationship with managing their money where they feel they are steering things from a place of confidence and pride.

Often people are prompted to come to an accountant for their tax.  But more and more of my clients don’t want me just to do it for them. Many people for whom their business is their spiritual path recognise that their growth requires them to address their difficulties with money.  One area which is often difficult for people is tax returns.

The shit with tax returns

The most immediate and obvious difficulty with tax returns is a deficit of information.  Often people simply don’t know what the rules are about tax, or how those rules apply to their situation, or the meanings of specific terms. And these things are often incredibly difficult to find out.  Not knowing what the rules are means most people are operating in a situation in which they don’t know whether they are complying with them or breaking them.  In behaviour research, this is widely recognised as the most stressful situation possible.

Another common deficit of information is what you need to tell HMRC, and what you don’t need to tell them.  Related to this is not knowing which numbers to add up, so it’s impossible to collect the necessary numbers in an ordered way.

Also with tax returns is the added concern about whether one has the money to pay one’s tax bill.  Once the tax return is done then the tax must be paid.  But of course we don’t know how much tax we have to pay until we’ve done the return.  A vicious circle! Add to this the common shame about not having enough money, and many people simply put off the whole thing.

DearHMRC_snoopyFinally, and most complex, is a very common inner process about authority figures. A tax return in essence reports your money activities to a government authority.  So our “authority issues” can readily come into play – often a potent mix of anger and fear which undermines our confidence and can cloud our capacities for mental activities like dealing with data, sorting and categorising, and so on.  The combination of authority issues and shame around money can be sufficient to entirely freeze a client and prevent them from taking any action, sometimes for years.

There’s several things I do to reduce the tension for clients around all this.  I know what the rules are, so the rules-conflict issue can be readily dissolved simply by sharing that information.  And I can also work with the client to estimate their tax bill without them having to file a tax return.  Then we can talk about them budgeting to pay their bill, or negotiating a payment plan with  the tax authority.

Also in a sense I stand in between the client and the ‘authority’.  Because I deal with that authority every day I anchor and embody an attitude of confidence and and personal agency.  Even though the client may not feel that within themselves, when they are working with me that confidence and agency is in their field – and so it is there to draw upon to the extent they are able to.  I hold a space somewhat akin to a therapeutic space: bracketed off from the full range of day-to-day concerns, so that the client can find the internal space to identify where they are at for themselves around money and recording their money activities.

Tax Coaching

Once they have identified their current relationship with money we can start to change that within the practical activity of doing their bookkeeping together.  This is what I call ‘tax coaching’: gradually helping people to be able to do their own tax returns.  Actually, filing the return itself is no big deal – it only usually takes about 15-20 minutes online these days. What IS the big deal is doing everything beforehand leading up to the filing: collecting the info about your money, putting it into some sort of ordered format, and assessing the numbers that come out the end.

For many clients all this seems mind-bogglingly complex, or totally overwhelming at first.  As we’ve seen above, clients can lack crucial information, are short of money, and have authority stuff running.  The idea of then sitting down and learning something entirely new just isn’t anywhere on the board at all.

But it’s definitely possible! Anwar Ravjani, who runs the fabulous bodywork service Embodiment Works, started with me in September 2013. He was determined to grow his business by doing some quite expensive training in a new area, but he had no spare money.  He sensed that there was a way to do what he wanted – if he could get out from under the terrible tension he felt around money and dealing with tax.

First I worked with him to record what had been happening with his money in the previous financial year. He had to do this anyway for tax, so it killed 2 birds with the one stone. I showed him how to download all his bank transactions, and how to work with them simply using some spreadsheet tools, to separate business from personal, and add up the business numbers.  He had to do this bit by bit – I usually suggest giving yourself some weeks or months to do it in, and to attack only a month’s transactions at a time.  This is about breaking down the job into small bits, with time to relax in between. And I was holding a space that knows it is possible to do, and it’s like doing the washing up: a simple procedure that gets done piece by piece.

After some months we had a picture of the 2012-13 year.  Then we could see what his actual income was, which prompted him to reflect on his income flow more recently. He was surprised to find it was more solid and more reliable than he’d thought.  This then enabled us to look towards the future and do some numbers to see how he could manage paying for the new training.  We found that with careful scheduling and some leeway from the trainer it could actually be done.  Then we filed his tax return.

I didn’t talk accounts with Anwar for 6 months.  Then he contacted me in mid-April saying his work was going better than expected and he was worried he’d have a tax problem.  Again the first thing to do was to get some numbers for the previous financial year, which had just finished 2 weeks before.  Again this took some time, but it was definitely quicker than the first time now that Anwar was clearer about what was needed.

With the numbers to hand we were quickly able to estimate what tax he would pay. Then we worked out how he could collect that money before the deadline in 9 months time.  With this out of the way, we filed his tax return.

Again I didn’t hear from him for a year. Then a few weeks ago he contacted me to say he’d done all his numbers for 2014-15 and could I cast an eye over them; the numbers said this year he would pay no tax, but he didn’t quite believe that.  We got together, I did some minor adjustments and we filed his tax return – all of which took less than an hour and a half.

We were both surprised by how quick it was.  Anwar said he’d gotten into a pattern of doing his accounts once a month because it was so easy and it gave him a feeling of being in touch with his money.  He was delighted in his new-found sense of competence with money, and how that empowered him in his relationship with money in his life. The focus had shifted from tax as a set of fear-inducing unknown rules associated with a threatening authority figure, to tax as a relatively small aspect in a landscape of complete information about money.  He reflected that, when we started 2 years ago such a situation seemed impossible.

I’ve found it usually takes three full cycles of doing something to really get the hang of it. For bookkeeping and tax this means doing three years of figures. I’ve now been established in London long enough that several clients have gone through this sort of transition.  It is really one of my greatest delights to be on that journey with them and to celebrate yet another member of our community who is empowered around tax.

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Seasons of the Accountant

fourseasonsIn the Accountant’s Cycle of the Seasons, there’s four distinct seasons.

The hottest is the long 4 months from October til 31 January – the Tax Season, when many people not fortunate enough to have a loving relationship with their accountant become gibbering wrecks, haunted by the ghastly spectre of the Tax Man. The Tax Season can be capricious: an apparently comfortable situation can suddenly be devastated by a looming tax bill. Or the gloom of a huge tax burden can suddenly evaporate when the error in the spreadsheet is located.

The Tax deadline of 31 January passes.  And then … suddenly … on 1 February comes Winter. For 2 whole months all accounting dies a death while the polite world heaves a sigh of relief and catches its breath, in preparation for…

The End of Year season – that slightly sweaty period of a month either side of the 5th of April, the end of the Financial Year. This has 2 halves: the first half is all about “OMG have we done what we needed to before the end of year?” While the second half is all about “ah – a fresh start; let’s make good resolutions!”

And last in the Cycle of the Seasons comes Summer – not only does accounting stop but most commercial activity stops too. My clients find their turnover reduces to a trickle, our attention is taken up with festivals, our bodies cry out for sun. Greenery triumphs, and we gambol and carouse for weeks…

… until about now, when once again the Tax Season is upon us, and the cycle starts all again.

The Pleasures of an Intimate Accountant

me in conversationAs your accountant I get to know the intimate details of your financial situation. But there’s also another type of intimate connection I enjoy even more with my clients.

One of the richest aspects of accounting for me is that being someone’s accountant brings me into a very intimate connection with that person.  In British (and Australian) culture, talking about personal finances is often uncomfortable – it’s not a topic of polite conversation.  Money is something we usually only discuss in detail with one’s spouse, or perhaps one’s parents or adult children.

In this way an accountant is in a similar position to a doctor: the professional examination involves revealing “warts and all”.  Obviously the accountant can’t do their job without all the relevant information – but I always feel a little frisson at the moment when the client starts to tell me the detail.  It is, in a psychic sense, very much a moment of “undressing”.

I deeply value my clients revealing themselves to me in this way. I feel it is a very vivid demonstration of trust.  Even though I know most people routinely interact with professionals of many sorts who require us to share our “secrets”, each time a client does this with me I feel it is special, and deserves acknowledgement, and respect.  It really is a relationship of vulnerability: my client is vulnerable to the extent to which I caringly respect what they have confided.

But in my approach to my work this intimacy and vulnerability is not just one way.  All my clients are people for whom their work or their business is a creative expression of their soul – just as my own business is for me.  Thus although there is a client-practitioner relationship, there is also another level of deep mutuality:  we share values around authenticity and creativity, and around the challenges involved in being true to ourselves and earning a living.

Sometimes this comes out in snippets of conversation where we discover a shared passion around some element of business operations.  Sometimes it comes out in drawing on personal growth principles to help us address an issue in the business. Sometimes I need to tell them I am triggered by aspects of their profession or their business.  Sometimes it will come out in what appears to be a rambling natter about something else – which then suddenly and unexpectedly crystallises for the client a vital aspect of their business focus.

I share with my clients a vigorous belief in disclosing all this personal stuff, in allowing the emotional and the seemingly-unrelated.  Often the wisdom of our lives comes out to affirm the other, to support the other and to validate the path we are already on. Together we hold a trust that the connection between us is right, that it is powerful, and that our connection generates what is of mutual value to us no matter what it’s content looks like.

This is what Kimaya Kroller-Younger calls Radical Intimacy. The attempt to accept all of what is there in oneself enables us to be more deeply with ourselves.  This in turn enables us to be deeply with others.  Of course we get scared, of course the acceptance is never complete.  But the edges where we stop are also moments to honour the courage it takes to go right up to the edge.  And often that edge can shift simply when it is accepted – by ourselves or by another.

Having created an intimate openness, our work together can then proceed as a collaborative project. They need their tax done, or their admin dealt with, or to know how their profit is going – whatever it is.  I ask if they want to get skilled up themselves, or whether they just want it taken care of.  The project can be anything, and of any duration.  Then we discuss what needs to be done to complete the project, what our skills and respective time constraints are, and then decide who does what and when.

The work proceeds well because we have created an intimate connection.   We have each brought ourselves present – not necessarily in our entirety but very much authentically in the moment.  Our beings resonate intimately with each other – and this enables a smooth working-together.

Last week I had several days which seemed to be a continuous dance of wonderful encounters with clients interspersed with work on collaborative projects.  By the end of the week I felt so full, so blessed to be in connection with such rich beings, and blessed that I have the opportunity to use my abilities in our mutual service.

Truly – the pleasures of an intimate accountant.

Why I love financial reports

A good friend accuses me of reading bank old_account_ledgerstatements for pleasure.  It’s true!

Financial reports give us a unique picture of our activities.  As we go about our daily activities in business we are taken up with the immediacy of talking with customers, and with the focus on delivering our special products or services, and paying the bills, and dealing with the landlord, and … and … and attending to all the myriad details which are part of running a business.

Financial reports give us a totally different perspective on all that daily activity. They can give us a moment of stillness in amongst all that.  It’s a bit like standing outside a window, looking in on our business.  Inside the window everything is very brightly lit like a stage set – every aspect is highlighted in sharp detail.

The sharp lighting means that we can see everything very precisely – the numbers are definite and exact.  And because we are standing outside, we can see the whole scenario in one sweep – we can see how all the various strands of our business relate to each other, and go together to create a complete picture.

But at the same time, it is only one view.  Financial reports enable us to see our whole business from a very specific angle.  It’s not the same angle as the marketing angle, or the product-delivery angle, or the staff management angle.  It’s the angle of our money  – where the money has come in from and where it’s gone out to, how much we have at the moment and where it currently sits.

Financial reports give us access to this complete picture of our money.  They enable us to see the flows of money through our business, and the shapes and sizes of those flows. It’s very reassuring and very clarifying to have such exact and comprehensive knowledge about out money.

One report gives us a static picture, like a snapshot.  What starts to make it really exciting is to get a series of financial reports across time. It’s like looking at a series of time-lapse photographs of the same scenario.  You can gradually see how the scenario changes, how it can slowly morph from one state to another.

But the final piece of excitement is coming to understand how you, as the business owner, can look at the current scenario, see what you want to change, and then go ahead and make those changes – so that when you get the next set of financial reports, you can see how the actions you took had an effect on the scenario the reports describe.

This really is Empowerment with a capital E!  Not only do you as the business owner have the power to take action.  In addition, financial reports give the added dimension of their precision and completeness to help you decide which actions are best to take in order to achieve your desired goals. You are in a position to make informed and thoughtful decisions which take into account all known factors. You no longer need to react. You don’t have to spend your days fighting bushfires.

The key to this empowerment is being able to read financial reports.  This requires a little bit of specialised knowledge.  Because I love reading them I’ve learned to be able to read a wide range of reports.  But the only reports you need to learn about are the reports about your own business – which is not such a big task.

One of my greatest pleasures with clients is making my specialised knowledge available almost like interpreter or translator, working with the client to bring into sharp focus the view of their activities which the financial reports point to. Getting the numbers to tell the story of your business.

But in keeping with my ethos of spreading the empowerment around, I get equal if not more pleasure from helping people learn to read their own financial reports.  For most people, the best way to learn is by doing, and running a business is one of the best places to learn by doing!

Most people start to get a pretty good grasp of their financial reports over 3 reporting cycles – that’s over 3 months if you do your accounts monthly.  Or 3 years if you do your accounts only annually. If you want to speed up your learning, we can look at past reports too. Most of the learning just happens in our conversation as we look at the reports together and discuss what the reports tell about your business.

Financial reports are tools for empowerment when the simple numbers on a page are understood as real and concrete information about your business.   With this information you are then in the driver’s seat – able to make informed decisions, make proactive plans, carry them out, and measure the consequences.

That’s why I love financial reports. 

“Doing everything yourself” vs. “Ensuring everything gets done”

There’s so many different aspects of a business – sales, marketing, admin, the technical ability or skill to deliver the core service, finance, design, and so on.  Some of these areas require exactly the opposite skills required for other areas – for instance sales requires empathy and people skills while finance requires a logical mind and abstract skills.  Its a very rare person who can bridge all the areas required.

But all these aspects of a business have to be attended to.  As a result, many business owners put huge pressure on ourselves about the areas we are not good at: we can see that things need doing but we struggle to do them. So we feel guilty about not doing them, or worry about them and do nothing, or beat ourselves up because we “should” be able to do it, or blame others for the poor performance, or get frustrated or angry that the stuff has to be done at all, or any number of other responses.

None of these responses really help, of course.  They’re just perfectly natural responses to feeling jammed into an impossible situation where something needs doing, you’re responsible for it, and yet you lack the resources to do it.  Awful!

To help my clients with the tensions around all this, I often find myself drawing attention to the business owner’s role as director of operations.  The shift here is to acknowledge that, yes, the owner is of course responsible for everything – but that responsibility is more specifically to ensure everything gets done.  This is NOT the same as “doing everything yourself”.

“Doing everything yourself” is like a rod for your own back.  “Doing everything yourself” is part of the stoic old-style grit-your-teeth model of masculinity – which carries over into the world of small business no matter what your gender is. It assumes that we are all isolated units, each entirely self-sufficient, and that we are judged by how capable we are of living up to this unrealistic and even cruel ideal.  In this world, responsibility is a massive burden that can kill.

“Ensuring everything gets done”, on the other hand, is a softer more humble approach yet it also implies the power to take action.  It assumes that we are limited creatures, who have strengths in some areas and are weak in others.  It’s part of the new spiritually-oriented or values-driven entrepreneurship which holds that we all have a unique contribution to offer, and that business is a collaborative effort which is a vehicle for each of our unique contributions.  In this world responsibility is empowerment to create the world of our dreams.

Ensuring everything gets done means getting other people to fill in the gaps where you’re not good at stuff.  This usually costs you money – though not always:  all sorts of creative arrangements are possible.  But whatever the exchange is, the pay-off can more than offset it – which is the whole point of synergy through collaboration.  If you get other people who, in supplying that service, are also pursuing their own unique contribution, there’s 3 returns:

  •  Bottom line: Every aspect of your business functions as it should.
  • Personal affirmation:  You get the space to pursue your unique contribution as well as the satisfaction of seeing you are a good business director.
  • Community celebration: Your own values, and the values of everyone involved, are affirmed and celebrated.

Its so easy, of course, to fall into “doing everything yourself”.  Thank goodness, these days there’s more and more support  for “ensuring everything gets done”!

Relationship wisdom we can learn from Accounting

Accounting systems make the very sensible assumption that we are human – which means that mistakes are inevitable.  No real human ever does things perfectly. Entry errors, mis-readings, absent-mindedness, distraction all actually happen – not because anybody intends to make mistakes but just because Life is Life and shit happens.

So one of the most powerful steps in the accounting cycle is to check for errors.  The process of “reconciling the accounts” or “doing a reconciliation” involves using a third party’s record of transactions to cross-check your own records.  Most commonly the third party’s records is a bank statement, but accountants will also use the records of customers, staff and suppliers – any party which has dealings with the business and which has a separate or ‘third party’ accounting system.

The reconciling process allows us to locate mistakes, identify how they arose and then fix them.  Because accounting systems get reconciled there is no penalty for mistakes. People don’t get blamed.  Mistakes just get located, identified and fixed.

The same pattern is relevant in relationships as well.  Relationships involve humans, and so inevitably mistakes will be made.  I will hurt you, you will invade me, I will disregard you, you will insult me. Very seldom are these things intended. Mostly we intend to do the best by the other person.  So when I make a mistake it’s not because I’m stupid, or I intended to hurt you, or I don’t really care about you, or any one of the million reasons you can make up.  I made a mistake because I’m a human.

What Accounting teaches us is it’s not important that the mistake has been made.  That’s just inevitable.  What’s important is that there is a system in place to catch the mistakes and fix them.  In other words what’s important is doing the reconciliation.

The reconciliation process involves a third party to me – which in the case of our relationship is you.  You, or your actions, alert me to a mistake having happened. Something’s off in our interacting, and that’s a signal that stuff needs to be attended to.  So we need to identify what the mistake is, and then fix it.  We can do this without blame for the mistake happening in the first place.  Removing blame is a hugely freeing step, which allows us to have much more clarity, and to work together to identify the mistake and to work out ways to fix it.

There’s another possibility here, though: it might not be my mistake.  I’ll use Accounting again to clarify.  Those third parties whose records we rely on to reconcile our own accounts also have their own accounting systems, and so they also make mistakes.  Most banks put a little notice somewhere on your bank statement saying something like “please check all these transactions to make sure you agree with them.”  This is not just marketing fluff – it’s a core part of their own accounting system.

So when I’m doing my bank reconciliation I’ll find a mistake. I check and re-check my own system, using the bank’s records, and after a few iterations I find that the mistake is not mine but the bank’s.  Bingo – I have to tell the bank.

The same possibility occurs in a relationship.  I may feel you’ve done something terrible: I feel really hurt, and so on.  But the only thing we can say with certainty at first is that a mistake has been made.  If I’m reconciling my accounts I tend to assume that the mistake is made by me.  When I’m feeling hurt in a relationship I tend to assume the mistake has been made by you.  But this may not be so.  It takes the first step of a reconciliation process – a back-and-forwards of active listening without blame – to identify exactly what the mistake is.  Only then is it possible to agree on how to fix it and carry out the fix.

Not only does Accounting show us that mistakes are inevitable.  It also shows us that reconciliation is normal.  It doesn’t mean there’s anything wrong in a relationship. Reconciliation is just a normal, routine and standard part of any good relationship.

I love it that there is such similarity between accounting systems and human relationships.  It affirms to me that The World is a fractal pattern, which occurs everywhere.  We are inside the pattern, the pattern is inside us, and the pattern occurs in its entirety in every single aspect of what exists.  Everything is intimately connected.