Debt Repayments Create Nasty Tax Surprises

Most business owners pay down debt every chance they get because it feels good, it give them competitive advantage and it increases the health of their business. However, debt payments are not tax deductible and business owners can get a nasty tax bill even though they have no cash on hand because the money was used to pay down debt.

The Connection (between balance sheet and income statement)

The balance sheet measures the financial condition of a business at a distinct point in time where the income statement reports financial performance over a period of time. The short video explains the difference between the two and how they are tied together.

The Two Halves of the Income Statement

An income statement can be thought of as having a bottom half and a top half. Strategically this is a much better paradigm than debits and credits. It give CEO’s a way to dissect their organization’s performance into two fundamentally different ways.