As the summer rolls in, things start to change. School is out, people are planning their vacations, and are ready for some relaxation. Your small business may start to slow down as well. Before you pack up and head to camp for a week, take some time to check in on your finances and ensure that you are where you want to be. Making sure everything is in place will allow you to truly relax.
Take some time and look at your goals, your projections for the year, and where you are in reaching them. This is frequently called a mid-year financial checkup. Keep these tips in mind as you get started.
It’s important to know where you stand, financially, at any given moment in time. Keep in mind, however, your larger goals and the big picture of your company. Once you have made sure that you are where you need to be for the year, take a look at your long-term goals and plans, and make sure that you’re where you need to be for them as well. Has anything changed that you didn’t plan for? How will you adjust to account for these changes?
Cash is flowing through your business, in and out, every day. Keeping track of this money, and ensuring your records are accurate, is the best way to avoid problems down the road. While a healthy stream of income eliminates much of the day to day financial stresses, make sure you are looking at larger, future issues. Preparing now can save time and trouble later.
Take a look at your net income from last year’s tax returns. How does your current year’s net income compare? Is it on track to meet or exceed last year? Now is the time to make changes if need be.
Review any loans or credit card accounts you have, and make sure you have no outstanding payments that were missed. Bring everything up to date.
Go through all of your accounts receivables and ensure that you have recorded any payments which may have come in. If you don’t do this now, your books will be unbalanced for the rest of the year.
Check out your monthly expense budget. Does it meet the needs of your monthly overhead costs? Adjust now, so you don’t need to scramble later.
PREPARE FOR TAX SEASON
Two of your quarterly tax payments have been made. Now is the time to ensure you are not making any mistakes. Nobody wants to be hit with a big tax bill, due to problems that could have been avoided. You should make sure that you are paying the appropriate amount towards your tax payments, and that you are utilizing the best deductions. This is also a good time to look at any capital purchases and determine if they should be deducted as a working expense, or depreciated over time. Brush up on the benefits of these two options and know which to use. working with a professional accountant or bookkeeper is a good way to learn the differences.
WRITE IT DOWN
Once you have decided what changes need to be made for the remainder of the year, make it a formal plan and write it down. Break changes down by month into manageable steps and ensure everyone involved knows what is happening. Set aside some time to develop an emergency plan, should something happen unexpectedly. You should know what you need to do if business suddenly increases or decreases.
You need to take your car to the mechanic on a regular basis to make sure it’s up to par. Similarly, your small business finances need regular check-ups as well. Scheduling time to do this at the mid-year mark is good practice to get into. Don’t let yourself get caught up in the summer fun without first ensuring your business is in a good place. Oftentimes, having an outside agency help you take a look can give you some further insight that you might not notice. Here at OnTrack Accounting, our professional accountant and bookkeeper staff are always glad to lend a helping hand!