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Four Ways to Accumulate Cash in Your Small Business for Corporate Tax Filing

If you read my last article and prepared your financial statements it’s likely that you have a  solid picture of your 2013 taxable income.

Accumulate Cash in Your Small Business

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Hopefully, you made a profit this year and now you’re faced with making a good decision on how to invest it and grow your business. Having extra money at the end of the year could mean a new vehicle, better training for your employees, or an amped up marketing campaign. It can be very tempting to use the money that you know needs to go towards your tax liability to better your business and choose not to save for the payment due on March 15, 2014. This can be risky, but with proper planning you can invest in your business and still have the money that you need to pay the government. Here are Four Ways to Accumulate Cash in Your Small Business for Corporate Tax Filing on March 15th.

Customer Incentives

Consumers love to feel appreciated and needed by the businesses they patronize, and the holidays are the perfect time to show that appreciation. Offering a small customer incentive is a great way to increase your sales. As the busiest shopping season of the year ramps up, every person is looking for a great deal. Service industries could offer a discount with an annual renewal or new contract signed, a complementary service for a friend when another one is purchased, or a free downloadable e-book with tips and strategies relevant to the business. Consider what low cost gift could bring more clients this season and weigh the benefits of investing your capital in that gift. Alternatively, assess what products or services aren’t selling well and consider revamping them or giving them away in a contest or sweepstakes.

Marketing

Marketing is extremely important for small businesses at every time of the year, but especially as we approach tax season. Investing your income in a larger marketing campaign could not only help you earn the money to pay your taxes, but also increase your overall income. The key here is to employ relevant marketing techniques, targeting customers who are most likely to visit your store and spend their money. Consider reviewing your marketing campaigns to your Profit and Loss statement to determine which campaigns provide a solid ROI. If you’re using QuickBooks, you can use the customizable feature to track the advertising method that brought clients to your business.

Cut Expenses

Cutting unnecessary expenses is always a good thing, but if you are struggling to come up with enough money to pay your taxes, it is especially important. Take a few days to evaluate your business and take note of any areas of excess. This may uncover some difficult truths, if, for example, you have an employee who is slacking off and costing you sales while happily taking salary. It’s important to ensure that you have good hiring practices in place so you can reduce the necessity of firing a unproductive employee. It doesn’t have to be as extreme as firing someone. It can be as simple as going paperless or switching phone service providers.

Employee Training

Most small businesses rely on their employees as their greatest source of revenue. If you have great salesmen, you get more business. If you have even one who routinely offends or bothers your customers, you could have money walking out the door, even if you have the best prices and products in town. A simple training seminar could be just what your employees need to refresh their skills and remind them of the importance of every customer. With better sales techniques, your employees will be able to rev up their conversions and help you prepare to pay your tax liability.

Accumulate Cash in Your Small Business

It’s important to have a plan to accumulate the cash you need to pay your corporate tax bill. Penalties and interest payments are a waste of money and an indication of poor business practices. I can help you gain control of your cash flow by setting up an efficient system and training you or your personnel on it. If you already have a system, I can help oversea it, identify gaps, and recommend solutions that improve your bottom line. Let me help unload some of the burdens of your business. Contact me today.

Gain a Holistic View of Your Small Business 2013 Taxable Income

2013 taxable income

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December 31st is just around the corner. It’s time to gain a holistic view of your small business 2013 taxable income so that you can prepare yourself for filing your corporate tax returns.  As a small business, it can be difficult to know where to start. In fact,  you may be tempted to put it off until the only options are to hire a tax preparer or make a dangerous slap-dash attempt at the forms. Incorrectly filing your taxes could lead to  significant problems down the line, including audits, penalties and allegations of fraud—even if the fraud is unintentional.

The only way to avoid the possibility of these problems is to gain a complete picture of the 2013 taxable income for your small business by the end of the year. This will provide you with some time, before tax season actually rolls around, to ensure you have the necessary capital and all the correct paperwork to pay your taxes correctly and efficiently. Allocating a little time today to prepare will make filing on March 15th less stressful for you and those around you.

Your Small Business 2013 Taxable Income

Here are four easy steps that you can take to prepare your small business 2013 taxable income picture:

Step One: Gather your bank statements. Your bank statements should provide a clear and concise picture of every income and expenditure your business has accumulated over the past year. Review your statements for accuracy.  Understanding where your cash comes from, where it goes, and at what intervals can help provide the most complete picture of your total income and expenses for the year. Many business expenses, especially for small businesses, can be translated into tax deductions. It’s a great idea to make a list of these potential tax deductions while you have your bank statements handy.

Step Two: Establish a balance sheet. Your businesses balance sheet is the statement of  financial position. It provides a single snapshot of your assets, liabilities, and ownership equity. Whether you use a program such as Quickbooks or a simple spreadsheet, a balance sheet will help you not only see the entire financial picture, but also help you keep track of them in the future. Organization leads to better business practices and fewer costs in the long run.

Step Three: Create a profit and loss statement. This document, based on the information gleaned from your bank statements and balance sheet, will provide you with one solid number. This is your net income, and is the money that you will be taxed on. The most important part of filing taxes is to provide adequate documentation for all of your money, both as it comes in and leaves your business. These three steps can help you get organized and prepare your business for the 2013 tax season.

Step Four: Get ready for next year. Having just compiled all of the information necessary for this year’s taxes, learn from this experience to become better organized next year. If your money is spread across more than one bank account, consolidate it. If you had trouble remembering what money was spent where, create an organizational system that allows you to document your expenses as they happen. Taking small steps now is the key to making this process less time consuming in the future.

The key to long-lasting success is always knowing where your business stands financially. As your business grows, it’s critical to have the right team in place. I can help you find the right accountant, bookkeeper, or other financial personnel by working with you to identify the necessary skills, knowledge, an attributes of a successful financial role. How can I help you prepare for success this year and beyond? Contact me today and we’ll get started.

Retirement Dreams Require Personal Financial Responsibility

This past year has undoubtedly been the best for the economy since the recession.Personal Financial Responsibility With new tax incentives kicking in, companies are finally seeing profits, where they were just barely, (often not at all) covering their expenses. The economy is expanding again, which is great for everyone involved, but it also means that many businesses are growing complacent. With cash on hand, they are paying off their bills and neglecting to prepare budgets, manage cash flow, and make projections about further growth.

It is this kind of attitude that is perpetuating a recessed economy. Small businesses must continue to plan for the future of their business and their retirement. Some of the recent economic growth can be attributed to the dispersion of bailout funds in the last four years. However, according to the August 2013 issue of The Kiplinger Letter, by 2016 that money will disappear. The economy will begin to shrink again and businesses will find themselves in deficit once again. By 2024, America is going to see interest payments on the national debt quadruple. That’s a serious cash flow issue, and why? Because saving has not been built into the budget. Don’t let this be the fate of your business and your retirement. Now is the time to plan for the success of not only your business, but for your retirement too.

Prepare a Budget with Future Deficits in Mind

Most companies already have a budget, at least a loose one. You know how much you have to pay in expenses such as, employee salaries, benefits, location rentals, lighting, insurance, etc. In general, you know how much money you have to spend every month in order to keep the lights on. In reality, you need to know exactly how much money leaves your account every month. Not only will this help you realize and eliminate waste from your spending, it will allow you to get a hold of your money and make it work for you.

Outside of the minor ups and downs that every business experiences, you need to be prepared for serious financial difficulties. Saving money isn’t just for individual households, as even the government has come to realize this year. Don’t spend every last dollar just because you have more dollars than bills this month. Next month or next year, the situation may be reversed. Think critically about where you can cut your budget and where you can save.

 Focus on Cash Flow

No matter what your business is, you probably have a good idea of where your money comes from and where it goes. You know your target market, and you know that those people are going to be the source of your income. Now, consider carefully how to tap that money source when you are seeing cash flow problems. In conjunction with formulating a living and budgeting, create a contingency plan that you can implement when sales are slow. Whether this is an aggressive marketing campaign or a new product or service, have a list of ideas and feasible enactment strategies that can help loosen your cash flow when money is tight.

Personal Financial Responsibility

If you want to retire you have to take personal financial responsibility for your business. We can help with cash flow management savings, preparing budgets, cash flow projections, and tying in your marketing plan with your business plan. When you create a good financial structure, your accountant will have less to give to the IRS and more to your bottom line.

Are you ready to live your retirement dreams? Preparation is key and we can help you get there. Call us today so that we can help you chart a better course for your business.

9 Principles for Securing Financial Peace for Your Small Business

Securing financial peace for your small business is important to your business, and due diligence is needed to reduce the chances that accounting errors or fraudulent activities lead your business towards failure.Financial Peace for Your Small Business  According to Dave Ramsey, most small businesses fail because of poor accounting, lack of budgeting, and debt. These might seem like basic tasks, but as many as 73.6 percent of small businesses fail after five years. Positive cash flow is essential, and it can make or break a business.

9 Principles for Securing Financial Peace for Your Small Business

If you want to succeed, consider implementing a few of these basic principles to secure financial peace for your small business:

  1. Keep Expenses Separate—Never comingle personal and business expenses. Deposit your business income and pay your expenses from your business account. You don’t need expensive business checks or an account with high fees. You can often open a business account with a few dollars, and eliminate fees by setting up a few bill pays online.
  2. Set Aside Taxes—When you pay yourself a wage, you’ll need to set aside money for taxes as well. A good rule of thumb is to set aside 25% of the amount that you withdraw from your account to pay taxes when they’re due.
  3. Budget—Every business should have a profit and loss statement for tax purposes. However, not every business has a realistic budget.  A budget helps you plan for the future and manage your expenses. It will serve as a barometer for how your business is performing, and you’ll be able to identify any seasonal or systemic problems that drain your cash.
  4. Act Your Wage—Don’t pile on the debt by buying fancy cars, new equipment, and expensive furniture for appearance purposes. Only buy what you need to keep your business running. As your wage increases, so can your toys.
  5. Eliminate Debt—Venture capitalists and investors favor companies that demonstrate positive cash flow. According to the Bureau of Census data, 60 percent of small businesses need less than $5,000 to get started. Start small and gradually expand as you experience more and more success.
  6. Save for Purchases—Systematically save for large purchases by setting aside a fixed amount every month towards the purchase price. If you can’t save the money, it’s likely that you won’t be able to make the payments either.
  7. Rent First and Buy Used—Rent expensive equipment until you can pay cash. When you save enough for the purchase, consider buying high quality used equipment to save money.
  8. Outsource—Outsource if you don’t have the skill or financial means to perform the work in house.
  9. Retain Earnings—You’ll want to retain some of your income for emergency expenses, a sudden loss of revenue, a great deal, or an investment in your company.

The easiest way to apply these principles is to develop an accurate budget and do a better job of accounting. You should also purchase only what your business needs to be successful, not just what you need for a tax break. How are you securing financial peace for your small business?  I’d love to hear your tips, and share them on a future post.