Besides being a time for reassessing personal finances, after tax season is a good time for small businesses to de-clutter business expenses and polish up business plans.
Here are some tips for small businesses to perform a little “spring cleaning” of their own:
1. De-cluttering expenses: Now it’s smart to think about next tax year and changes you can make today. As a small business owner, remember to keep your business and personal expenses separate. Business, checking, and credit accounts that are separate from personal accounts can help you keep accurate and complete records of all business-related income and expenses. If you make changes now, you’ll have separate statements and records to establish business income and expenses in 2017.
By doing this, you can also find ways to reduce costs and cut unnecessary expenses. An easy way to audit your expenses is to print out a list of all expenditures from your accounting or bookkeeping system or contact a trusted accountant, and determine whether or not they were necessary to keep your business running. It’s important to make sure your not throwing time and money towards business expenses without seeing if those expenses are still adding value.
2. Dust off your Business Plan: Every small business should have a formal business plan to help with business decisions and strategic planning. If you have one already, now is the time to do a quick review and consider updates to reflect your current business needs and goals. If you don’t have one, set aside time to draft this all-important document.
A business plan can guide you through the entire lifecycle of a business. It can help local business owners prioritize how to spend their time and money, and set measureable goals. A business plan also may help you obtain business financing. For example, for an SBA loan and some larger business loans and lines of credit, lenders may require a formal business plan before extending credit.
3. Freshen up your Transition Plan: As a small business owner, you’re probably not thinking about selling your business or retiring just yet, but it’s never too early to start planning ahead. There are many things to think about – whether you want to sell your business, pass it to a family member, cash out or wind down entirely – and this can sometimes be a daunting task. Whichever path you choose, it’s a good idea to take look at your transition plan while you’re refreshing your business plan.
4. Reduce your Cash Flow Burden: To run a successful small business, it is of course essential that you maintain a healthy cash flow. A best practice is to track your cash flow on a monthly basis. This can help you improve cash flow projections and better plan for recurring expenses and business expansions.
Nearly every small business will face a time when it needs more cash than it has at its disposal. During spring cleaning, you may want to consider if a business line of credit would help patch up any holes your business encounters in cash flow. For instance, during tax season, you may want to use a line of credit to help keep your cash flow constant and cover any ongoing expenses, while paying down your tax debts.
Consider making time to meet with a trusted accountant for a spring financial review that includes an assessment of your tax and financial needs.
Scott A. Kunkel, CPA PC can offer sound financial advice regarding all the post-tax season money tips above. Call us today in North Richland Hills at 817-498-1040.
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Source: The Street