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Make Confident Decisions

Are you making confident and informed business decisions about taxes and cash flow? Are you doing regular check ups on the health of your business?


We are mostly through the crunch of filing 2021 tax returns and it is time to focus back on accounting. Successful business owners have a good handle on the accounting in their business and they focus in these areas:


  1. Cash Flow - They anticipate the cash flow needs of their business and plan ahead for gaps

  2. Planning - They check in with a professional regularly to make sure their business is healthy

  3. Taxes - They prepare and plan for taxes


Cash Flow -

Good coaches teach their athletes how to anticipate the opponent's next move. Marathon runners review the course and learn which miles they will run uphill or downhill. Success depends on anticipating and mentally preparing for what is coming.


Some business owners rely on the balance in their bank account as an indicator of the money they are making. Don’t get caught in this trap. Every business has a cash flow cycle and understanding your business is key to preparation. Some expenses are regular and easy to track and others pop up quarterly or annually. For example, if you own real estate you pay large property tax bills one or two times a year. Insurance is another example of bills that are only paid every so often. Putting together an annual budget helps you to spot the months that you will need extra cash to cover these intermittent expenses.


Planning -

Do you ever look at the annual profit and loss statement prepared by your accountant and ask the question, “Where did all my money go?” That is a good indicator that you are not paying enough attention to the accounting as you should. We recommend that you have quarterly or monthly calls with your accountant to review the numbers, set goals and make sure you are spending in the right places to grow your business and your wealth.


Taxes -

No one likes it, but taxes are a part of being a business owner. You must understand and plan for the taxes in your business. It is hard to keep up on all the rules for your federal and state returns. Business owners pay personal property taxes, transit taxes, sales tax, commercial activity tax, payroll taxes and income taxes, to name a few. Make sure you understand these taxes. Estimate and add the tax expense to your business planning so that you have the cash needed to pay the taxes when they are due.


Using a tax professional can also help you put strategies into place that will reduce your overall tax bill and allow more cash to work for you in the business.


 

If you feel like you are lacking in any of these areas, put a fresh goal down on paper and start working to improve the accounting in your business. Spring is a great time to clean and start fresh. Let us know if you have any questions about how to implement tools that will help you track your cash flow, plan and prepare for taxes.


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