Small-Business Financial Resolutions for the New Year

The approach of a new year inspires hopeful thoughts for the future. Topping the list is an eagerness for financial security, but achieving this requires more than abstract desire. Financial goals are only attainable when one constructs a workable design for the future. Despite uncertainties that may arise, commitment to a few indispensable actions can help your business thrive in the year ahead.

Start Early on Taxes

Perhaps the best protection against uncertainty is starting early on tax return completion. Tax season starts right after the middle of January. By the end of January, you have no excuses for not knowing prior year results.

A commitment to organized financial statements assures that tax return preparation work proceeds smoothly and is completed early.

Your accountant will likely have some annual bookkeeping adjustments for tax purposes. You only need to have the books in order that summarize ordinary day-to-day results of business operations. You should be aware of key elements such as total revenue, totals paid for each business expense category, and year-end asset and liability balances. Make sure your bookkeeper has enough information to reconcile the books to financial institution statements for bank accounts, credit cards, and loans.

Tax returns have deadlines. Long before the due date of your income tax return, you want to know the amount of any tax you owe.

Commit to Financial Evaluations

Maintaining reliable financial records throughout the year allows you to monitor business performance. Conducting regular self-analysis assures you’re on track for achieving your objectives. Be sure to plan for devoting time next year to recurring examination of business financial statements. This is the only path to quickly resolving any omissions or errors.

If you’re not sure how to interpret the business financial statements, professional accounting help is all you need. An accountant can summarize income from various products or services as well as describe where the money is being spent along with spending trends. Armed with this information, you can make optimal decisions about directing your time and other resources to maximize profit.

Reduce Business Expenses

A surefire way to increase business profit next year is to reduce expenses. Revenue can remain unchanged while the bottom line improves simply from lower costs. Resolving to save a fixed amount is too abstract. The better resolution is determining a precise expenditure target.

A cost-reduction goal may seem small, but it adds up over the course of a full year. Lowering a recurring monthly expense by $20 puts an extra $240 in your pocket. Since $20 isn’t much, select a few categories for this savings. Reducing the monthly cost for insurance, telephone, and internet by $20 each delivers a $720 annual savings. This means a lot to a small company. Even a large enterprise strives for this amount of profit increase, because it’s enough for a loan payment on a large amount for expansion or upgrades.

Completing your tax return early, committing to regularly scheduled financial statement examination, and continuously checking up on specific cost-reduction goals are resolutions to keep for success throughout the new year.

Two Quick Ways to Improve Business Cash Flow Next Year

Avoiding life’s negatives is generally a noble aim. And when it comes to cash flow, every business owner wants a positive outcome. Running low on cash signals trouble ahead. Judicious management of cash flow is more crucial to sustainable operations than generating new sales. After all, a business can survive slower revenue, but not without cash. The usual methods for enduring a cash crunch are establishing a line of credit, negotiating terms with vendors, and offering discounts for early-paying customers. Implementing a couple more creative measures, however, can result in permanent cash flow enhancements.

One important cash-saving procedure is timely remittance of taxes.¬†Income tax payments in particular are supposed to be made in equal installments throughout the year. Penalties are assessed if you underpay the required estimated tax installments. Waiting to pay after year-end may mean parting with a surprisingly large chunk of cash. If you’re not sure how much taxable income to expect for the year, the IRS has a “safe harbor” formula based on your tax in the prior year. Your accountant can make this calculation, but doing so necessitates filing your tax return by the initial due date.

Another technique can improve cash flow for a business that receives recurring customer payments, such as contract work. This is accomplished with direct electronic payment using the Automated Clearing House (ACH). ACH transactions may be established with your customers to push funds directly to your bank account. Similarly, an ACH direct debit arrangement permits your bank to pull funds from a customer for preauthorized amounts. These methods eliminate invoicing and waiting for payment. The result: faster cash flow and a better bottom line.