Ah… summer, the time for barbecues, the beach, concerts, and books. While I’m sure that new John Grisham novel is calling your name, you know what’s screaming it? Your business’s books. That’s right, summer is a great time to evaluate how your business is performing and take care of some of those unsexy tasks that just need to get done. So, when summer hits each year, trigger these 4 to-dos.
1. Do a mid-year budget review
What is a budget review, you ask? Not to worry, we wrote a whole other blog post on how to review your budget. In a nutshell, comparing how your business is actually performing to how you thought it would perform provides you with actionable insights to help you run your business better. This isn’t a one-and-done kind of a situation. It’s an iterative process to be undertaken several times a year (summer included!), which enables you to continue refining and growing your understanding of the key financial levers that drive your business.
2. Pay estimated taxes
If you pay quarterly taxes, finalize your Q2 tax estimates (June 15, 2017 deadline) and start thinking about Q3 (September 15, 2017 deadline). The easiest way to do this is paying directly from your bank account through the IRS website.
How much in estimated taxes do I need to pay?
If you have a few hours or full day to dedicate to calculating your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year, we recommend following the IRS’s super simple (eyeball roll) worksheets (this one for individuals, including sole proprietors, partners, and S corporation shareholders, and this one for corporations).
Or, if you want to make things easy on yourself, take the safe harbor approach and use what you paid last year, divide it by 4 and pay that each quarter (unless your gross income was more than $150,000, in which case you multiply last year’s payment by 110%). By following this approach, you avoid penalty (and minimize worrying). The downside is that you may end up overpaying, which means you’re essentially giving the government an interest-free loan with a very specific payback period and taking that money away from growing your business. Alas, there’s always a price to pay for certainty.
3. Finish filing your taxes
If your business filed for a tax extension (and you are not a sole proprietor), get on those taxes! You have until September 15, 2017 to pay up (or October 17, 2017 if you’re filing as an individual or C-Corporation). That’s just after Labor Day, just as kids are getting back to school, right when things have calmed down and you have time to finally search through your 30,000 emails and overflowing file drawers to find that one last piece of information you need to file.
Things will not calm down the first week of September or in early October when Fall is in the air and you’re busy carving pumpkins and apple picking. You will not be less stressed. And, you’ll definitely still be barbecuing up a storm. So, do this: one sweltering day in July when it feels like you’ll burn to a crisp just stepping outside, spend a few hours finding those last pieces of information to send to your tax preparer.
If you’re dealing with a bigger issue where you’re not confident in the financial data and need to either dive into your books yourself or hire someone to do it, take an hour one hot-as-you-know-what day to evaluate the depth of the problems. If you want to cry just thinking about it, maybe it’s time to bring in backup. With a few concise questions and a little bit of guidance, a good accountant can fix pretty much anything.
4. Do an Accounts Receivable blitz
Do you still have projects you worked on back in February that haven’t paid you? Or product sales you’re still collecting on? June is a great time to evaluate past due accounts from the beginning of the year and reach out to secure payment or write them off. This is money that could be in your pocket! And it may be worth a bit of money (like paying a bookkeeper to follow up with your customers) to make sure you’ve done everything you can to collect.
Even if summer isn’t your business’s busiest time, it always feels like one of the busiest times of year. But, if you remember to take these four steps at the start of summer every year, such an overwhelming sense of calm will come over you for the rest of the summer, you’ll probably get to enjoy that John Grisham book after all.
If all of this feels too overwhelming to tackle alone, don’t forget that Paro’s on-demand bookkeepers and accountants are here to help.