Your business made $300,000 last year.

Nice.

So why are you staring at your bank account wondering whether you can make payroll on Friday?

Welcome to one of the great mysteries of small business:

Making money and having money are not the same thing.

Annoying, isn't it?

Welcome to Revenue & Regrets — real business, real money, and the questionable decisions people make with both.

I'm a bookkeeper.

I've spent years looking behind the financial curtain of small businesses.

I've seen businesses that look wildly successful from the outside and are hanging on by their fingernails.

I've seen profitable businesses with almost no cash.

I've seen businesses with plenty of cash that weren't actually making much money.

And I've seen business owners look at a healthy bank balance and think:

Ooooh. Money!

Narrator: It was not all their money.

I'm staying anonymous.

My clients are too.

The lessons aren't.

If your bank account says $42,713, congratulations.

You have $42,713 in the bank.

You may NOT, however, have $42,713 to spend.

Some of it may be needed for payroll.

Some of it may already belong to suppliers.

Your credit card could be sitting at $11,000.

Loan payments are coming.

Taxes are coming.

And somewhere in the distance, your accountant is sharpening a pencil.

Suddenly that new truck doesn't look quite so affordable.

Business owners love talking about revenue.

“We're doing $750,000 a year now.”

Great.

But what did it cost you to make that $750,000?

If it cost $740,000, I'm considerably less impressed.

Revenue tells me how much the business brought in.

Profit tells me whether the business actually made money.

Cash tells me whether you can pay people on Friday.

Three different things.

All important.

And confusing them is how perfectly good businesses end up in perfectly terrible situations.

Taxes.

This one is especially dangerous because sales tax you've collected doesn't arrive in your bank account wearing a little name tag:

HELLO. I'M NOT YOURS.

It just sits there looking remarkably spendable.

Here in Canada, that can include GST/HST you've collected from customers. Depending on where you operate and what you sell, there may be provincial sales taxes in the mix too.

For my non-Canadian readers: don't worry. We haven't accidentally turned this into a Canadian tax newsletter.

Different acronyms. Same problem.

Sales tax you've collected isn't your shopping fund.

So what happens?

Business owner sees big bank balance.

Business owner buys something.

Tax deadline arrives.

Business owner discovers an exciting new emotion.

Regret.

One of the least glamorous — and most useful — things you can do is keep money you've collected for sales tax separate.

Different account.

Out of sight.

Out of mind.

And safely away from that moment when you decide the business absolutely cannot survive another day without a $4,000 espresso machine.

Give your taxes its own home.

Open a separate savings account for taxes and regularly move the money you've collected or set aside into it.

Don't wait until the payment is due and hope the money is still there.

Bonus: watching your tax account grow is considerably less exciting than watching your operating account grow.

That's kind of the point.

Instead of:

“My business did $500,000 last year.”

Tell me:

“My business did $500,000. It made $95,000 in profit. I know what's coming due. I've set aside money for taxes. And I have enough cash to cover my obligations.”

Now we're talking.

Because the goal isn't to build a business that looks successful.

It's to build one that actually makes you money.

There are businesses with beautiful websites, shiny vehicles, impressive offices and enormous revenue that are financially held together with duct tape and optimism.

Meanwhile, there are boring little businesses you've never heard of quietly throwing off cash year after year.

Give me the boring one.

Every. Single. Time.

A business owner recently decided they needed a new bookkeeper.

Nothing particularly unusual about that.

Until I heard the rest.

They had paid their bookkeeper months and months in advance.

Okay...

They also didn't have control of the login to their own accounting system.

The bookkeeper did.

Oh.

But we're not done.

Somewhere along the way, the professional relationship crossed one more rather spectacular boundary:

The business owner lent the bookkeeper money.

Yep.

The person being paid to look after the books now owed money to the person whose books they were looking after.

There was a repayment arrangement.

And now even that arrangement is becoming...complicated.

At this point, we have left Bookkeeping Land and entered What the Hell Happened Here?

Trust slowly turned into too much trust.

Paying well in advance. Giving up control of critical business access. Mixing a professional relationship with personal lending.

None of those decisions probably felt enormous when they happened.

Together?

That's one hell of a knot to untangle.

Trust your bookkeeper.

But keep the keys to your own business.

You should control your accounting software, banking and other critical accounts. And financial boundaries between you and the people you hire are there for a reason.

A good professional relationship needs trust.

It also needs boundaries.

Open your business bank account.

Look at the balance.

Now ask yourself:

How much of this is actually mine?

Not “How much could I technically spend today?”

How much is left after the bills, payroll, credit cards, loan payments, taxes and everything else that's already spoken for?

If you don't know the answer yet, that's okay.

But that's the number worth knowing.