Spring is officially here. March 20 is the first day of spring, we’ve changed the clocks to daylight savings time, and Tax Day is in four weeks. This year, taxes are due on April 18.
As a business owner, this is a good time to take stock in your organization and determine future success. While you should always know where you are financially, this is an optimal time to consider the big picture and make sure your business “house” is in order. While you’re gathering and organizing your information to file your taxes, take the time to reflect on how to best run your business so it is not only profitable for you each year but a possible lifetime investment.
Here are a five financial planning tips that new and seasoned business owners should consider:
1. Develop a plan that takes into account your personal financial goals as well as your business goals. These should complement each other and help you build your business for personal success. Select a legal structure that suits your long-term needs. There are many options available from an LLC to a full-fledged corporation. Discuss the best option with your attorney. Which leads us to the next tip …
2. Hire professionals. Using your cousin to do your taxes might save some money but is only a good idea if she’s a CPA. The same goes for the person setting up your company. An attorney will set up your company properly as well as help you when other contracts and paperwork are needed. Having a “team” of professional working for you might sound expensive but could save you money in the long run. It will also provide a business owner with peace of mind.
3. Learn how to control costs and understand cash flow. Look for ways to reduce overhead and administrative costs. Also, know when your company’s cash flow may fluctuate. Your business may experience seasonal sales swings that you can anticipate and plan for. Learning about options, such as barter, can also help you sell inventory, fill appointments, and save cash during those times.
4. Manage your taxes. Don’t let small business taxes get the better of you. Make sure you meet deadlines, make payments in full, and stay ahead of quarterly taxes to avoid paying late fees and penalties.
5. Plan for succession. This is an important focus as businesses grow and mature. Someday, you might want to take a smaller role at your company but allow it to keep growing. Have an idea of who could run the company for you. If you don’t have anyone currently, identify someone who could grow into the position or look to hire someone who meets those qualifications. This is also a good idea in case of illness, extended vacations, or emergency family situations.
Make the time to keep your finances organized to help your business run smoothly both now and in the future. Plan accordingly and your company could provide you with solid financial performance for many years to come.