27. 💰 How the government tried to steal $30,000

Tax season is in full swing which is why we wanted to share with you a story about how the government tried to swipe $30,000 in taxes from a previous business of Jill McAbe's (our Founder and CEO) that they were not actually entitled to.

We're spending March focusing on financial literacy and money management with our clients so they can achieve financial independence through their businesses. And we want to share some of those teachings with you as well.

This week I sat down with Jill to learn her money story of how she overcame major money hurdles to create a business of ease, joy and fun while getting meaningful business done (yes it rhymes 😁) , and all by using sound money management practices for entrepreneurs.

Although Jill's parents attempt at entrepreneurship led to financial ruin for their family, Jill and her twin brother, were determined to get it right when they opened their first business, a restaurant.

As her brother held the position of Chef, the task of bookkeeping fell to Jill, a job she resented as she too was a creative person who found office work unfulfilling.

But the experiences she had gone through as a child, manifested in her a compulsion to track everything in her financial record keeping. Even though Jill knew the risk of letting someone else be in charge of her finances she was hampered by not having been raised with the money management skills needed to successfully maintain a small business.

Luckily the restaurant had an advantage in their investor/mentor, Douglas Davis, Vice-Chairman of a successful investment firm, Davis-Rea. Each quarter Jill was required to meet with Douglas to go through the books.

And at each meeting he would point out something wrong, something to fix. It wasn't fun and in the beginning Jill resented being put in this position, but overtime she learned to respect her mentor's input, as her money management knowledge grew.

Then after seven years of rave reviews and a demanding workload Jill and her brother decided to sell the restaurant.

It was with great satisfaction to Jill that they were able to return Douglas' investment...with interest.

Though less satisfying was that the sale triggered an audit, and since Jill was the one who managed the finances she was left to prepare the books for government scrutiny.

When the Auditor appeared he gave her two weeks to collect her files and paperwork for him, but Jill pointed to a chair and said, “Have a seat. I’ll get it for you.” To his surprise she returned quickly with all the necessary paperwork in a binder, with a table of contents and colour coded tabs. He told her this level of organization was not the norm.

A few weeks later she received a call from the Auditor informing her that from the results of the assessment “you owe the government $30,000”.

It wasn’t possible! She had been meticulous with her books and honest in all her dealings.

When she asked the auditor to point out where the problem was, he couldn’t, and eventually admitted it was an estimate based on their experience that every restaurant had something to hide. Jill held firm and he compromised by performing a second stage audit of the restaurant's previous six months. Once again she was able to produce well-organized records.

After a few more stressful weeks the auditor returned with a "Nil Assessment", which meant Jill’s business owed nothing and that her books were perfectly balanced. It was the first time in the history of the department that had happened, and her Auditor’s parting words were “good job”.

Thanks to Douglas, Jill's money management was spot on and the government was unable to take the $30,000 they were not entitled to. Over seven years of quarterly meetings with Douglas he instilled in Jill an understanding that in addition to a bookkeeper and accountant, she needed to be her own financial manager, in the business world that's the CFO. And it's not a position entrepreneurs should be outsourcing until they know their own books inside out

The restaurant industry has more failures than it does successes, but thanks to Doug's mentorship and financial literacy training, Jill's was one of the success stories.

Co-incidentally a few years later when Jill became a business and marketing educator and strategist, another Davis-Rea advisor, Libby Wildman became a client of ours. She also shared some great financial advice, and that was "everyone should have a date with their money once a month".