As a firm providing accounting services in and beyond Kearny, New Jersey, we see how nowadays, there’s an undeniable trend on how investors decide which businesses deserve their money. They won’t simply agree to invest on you after seeing a nice presentation of what you do or what you sell. They ask questions and they demand to see the detailed reports of your business’ cash flow. And how can one easily track cash flow? Well, your taxes offer the most comprehensive window to how you save and spend. This explains why it’s what investors would want to see and understand in a finely detailed manner. And giving your potential investors — as well as other bodies that may demand such — access to those records is called tax transparency.
Basically, having tax transparency is being an open book towards investors and other concerned agencies when it comes to your taxes and how you pay them. Now, you might be asking, “Why is this needed? Why would investors want to bore themselves with complicated paperwork anyway?”
Well, transparency is important for a number of reasons.
The first is that investors understand how taxes are the building blocks and foundations of society. There’s a general understanding that paying taxes is directly linked to being a law-abiding citizen partaking in their social responsibilities. These investors also know that solid government institutions create more space for corporate competitions where businesses are sure to grow and thrive. So it’s understandable that they would find your business quite attractive if you’re transparent about your taxes and if it shows your excellent ability to pay.
But despite how logical that point already is, that’s not actually the most important reason for tax transparency. A more relatable reason would be the fact that it clears all sorts of doubts. After all, the very reason an investor would take a look at your records is to know whether the money they’re giving you will be in safe hands. If you can show through your records that you’re a responsible taxpayer, then investors won’t ever worry about certain risks such as possible illegalities or hidden debts. Basically, being transparent of your records keeps you from being shady. And as an honest business, investors would feel at ease investing in you.
The last reason worth mentioning is that for investors, the amount of corporate taxes you pay for your business is enough to show its profitability. In a sense, a track record of your business’ cash flow in the past can give light to how you’ll manage your finances in the future. How you pay your sales and use tax for your Kearny, NJ business — for example — shows how responsible you are in handling money. It’s going to be their money at stake, after all. And no investor would want to lose money without gaining anything back in return.
So whether you have a small or large business, make sure that you prioritize accomplishing tax transparency. Being responsible with your paperwork and tax declarations is — needless to say — a great personal investment. Unfortunately, dealing with taxes and financial documents can be tedious, time-consuming, and plain confusing for most preoccupied business owners.
But that’s where we come in because you can entrust those worries to us instead. Nicholas J. Coco, CPA is one of the leading accounting firms that offer tax services both in and out of Kearny, NJ. So if you want to prepare your business for some potential investors, feel free to call us at 201-955-3100 or email us at firstname.lastname@example.org. If you simply want your business to be as clean and honest as possible, let us know how we can be of assistance. With us, professional service is what you can expect!