Are you a kind of Wolf of Wall Street?

I am pretty sure that you watched the famous film The Wolf of Wall Street. I think I met one in real life, this is a kind of Wolf of something in business. But I’m not talking about drugs, prostitution or be a rich arrogant. I’m talking about trying to do something illegal in a shameless way.

Do you think that you can be more smart, crafty and intelligent than the IRS or other federal institution? The American System is huge and complex than you think.

Let me tell you a story about a business owner that I met a few years ago. When I met this person he owned two restaurants one in Downtown Miami and the other one in Miami Beach and then he opened a third restaurant and then a fourth restaurant with one commissary kitchen, good think right? Yes of course but how you handle your business is more important than growing.

Here is the point. Their restaurants always managed cash and they never receive card payments, only cash. What you tried to hide management with cash? I don’t say that manage your business with cash is illegal but if you manage your business just with cash you have to be very, very clear with your bookkeeping and transparence with your accountant. You have to keep records in paper of every single sell (transaction) that you have in your business. Part of the American system is match everything with everything and if you try to skip, avoid something or worse do not paid taxes or report taxes with a huge different of your real numbers. Be careful! Do not play with fire!

What happen with this business owner, the IRS started a full investigation and found a huge case of tax evasion the IRS ask him to pay thousands I mean thousands in dollars in taxes and penalties. The situation is not just the money that you have to pay in taxes is the money that you have to pay in attorneys and accounting try to resolve the problem.

At the end of the story, this year he sell their businesses to be in peace. Ladies and gentlemen is not just about growing your business is about doing the right thing from the beginning.

How big is the problem of tax evasion?

William G. Gale Director of Retirement Security Project says: “Tax evasion – the act of not paying taxes that are owed – is illegal and is an underappreciated problem in the United States. About one out of every six dollars owed in federal taxes is not paid. The amount of unpaid taxes every year is plausibly about three-quarters the size of the entire annual federal budget deficit. The rate of income misreporting is significantly higher for income from sole proprietorships and farms, and it is likely higher for high-income households than lower-income households.”

I am a true believer that business is about VALUES not about if you are smarter than anyone else or you are the most expert person in the entire world. Business is about learning from your own experience and also learn from others.

What can you learn from cases like this?

Looking forward to meet a new business owner to do consulting. Contact me at the right time!

Written by: Alexander Lara