With the leaves changing color and summer coming to an end, the Fall season is a great time to evaluate your business financials and find out where your money is going. Before you break out the sweaters and scarves, and way before you carve a pumpkin or dress up as Wonder Woman, contact your bookkeeper or accountant, as it may be time to reevaluate and make some changes. Here are a couple ways to start the fall season off right!
1. File those taxes or make an advance payment
You are probably thinking: the year hasn’t ended, why do I need to think about my taxes? Well, unfortunately, tax items can be ongoing and you don’t want to be caught up in a situation where you owe too much. If you extended your returns way back in the beginning of the year, now is the time that they are finally due. Make sure you have a tax accountant preparing your return for either the September deadline or the October deadline.
If you’ve already filed your return, excellent job being ahead of the game! Did you owe a lot of money this year? If so, you may want to think about making quarterly estimates. Fall is the perfect time to analyze your business income and see if you need to set aside money to pay taxes. The last thing you want to be doing is make a huge payment to the IRS unexpectedly. Quarterly estimates help you pay a small amount each quarter, so you’re not stuck with a huge bill to the IRS when you file your taxes in the following year. Even if you missed the first, second and third quarter payments, it’s not too late to catch up in that fourth quarter to save yourself from writing a giant check next year!
2. Do an accounts receivable blitz and collect on that outstanding A/R
Fall is also a great time to take a look at your outstanding accounts receivable. Have you been collecting on all those invoices you sent out this year? Do you have clients that haven’t paid you in weeks, months, possibly years? Look at your accounts receivable and see what may need to be written off as uncollectible. Otherwise, start reaching out to people that owe you and get paid! This is a great task to utilize your bookkeeper, who can help you follow up with clients that have not paid you. Fall can provide a lot of downtime for businesses to be able to catch up on their A/R. It’s time to get that money that’s owed to you.
3. Analyze your books. Where did all your money go?
Summer may have been a busy time for your business, and you may not have had time to really dive into your finances or see how much you’re spending. If you had an exceptional year and made a lot of money, you’re in for a real treat come tax time. But, if you weren’t expecting so much revenue, you’ll likely owe a lot more in taxes than you anticipated. Now would be the time to see how you can lower that net profit.
For example, you may consider investing some of that money back into your business by purchasing fixed assets. This will increase your depreciation expense causing a decrease in your profit. On the other hand, you may have the opposite problem of too many expenses. Even if summer was a slow period for your business, it may be time to evaluate your needs and determine a better output moving forward. What are your greatest expenses? Go through your expenses and see what you have been spending all your revenue on. What is necessary vs. what can you possibly cut down on. Maybe it’s time to cut costs on one expense to be able to advertise more so revenue can increase.
4. Reevaluate your budget
If you had a budget for 2017, it’s a clever idea to go through it and make sure you’re on track. Have you been consistently over or under budget each month? If you’ve been under budget, that’s great! You may be able to reallocate those extra dollars to something else such as renovations for the business or possibly hiring more talent. If you’ve been over budget, now’s the time to reign it in. Start cutting costs where you can to keep your expenses in check. For pointers on how to actually go about reviewing your budget, check out this blog post: How Often Should I Review My Business Budget.
If you budget was quite above or below your predictions, you may consider doing a latest best estimate (LBE) of the data. Essentially, this means taking a fresh look at your data and developing a prediction for what your numbers will look like at the end of the year based on what has transpired over the course of the year. This will help you allocate your resources more efficiently for the last quarter, better prepare you for your tax bill, and give you a better sense of what assumptions were accurate. Use this information to create realistic but challenging goals for your team and develop a more informed 2018 budget.
5. 1099s and W-2s are due January 31, 2018, so get your info in order!
Fall is the perfect time of the year to get ahead of schedule with 1099s and W-2s! Check in with your bookkeeper or accountant and ask them if your business is prepared to issue 1099s and W-2s at the end of the year. Usually, for anyone on payroll, you’ll already have that information in your database if you use a payroll provider. If you hire a lot of independent contractors, you may not have gotten all the information you need to be able to issue a 1099.
What will you need?
Social security numbers for individuals or EINs for businesses and the amount you have paid each contractor throughout the year. No big deal, right? But chasing down contractors for the info right before the deadline can be a huge (and unnecessary) headache.
When are W-2s and 1099s due?
Both W-2s and 1099s are due on January 31, 2018. Make sure you have what you need ahead of time so that you don’t have to spend your holidays tracking down people and info.
So, are you ready for Fall?
Did this to-do list make you feel more like Robin than Wonder Woman? Maybe you’re trying to tackle too much or your current bookkeeper or accountant isn’t providing you the necessary info for you to take action? These recommendations are not rocket science, but if you don’t have the proactive partner to help you prepare, you could easily feel overwhelmed.
Absolutely use Fall as a time to pick apples and enjoy a hayride or two (for those of you who live where the seasons actually change), but also to figure out what you need to have better insight into your business and to make more informed decisions. Paro can connect you with the person or people that best fit your business needs and help you get ready for Fall and even more importantly, year-end and tax season!