Maintaining and managing healthy cash flow is key for small businesses, particularly if your business is seasonal in nature, like a construction or landscaping business. Remember, work tends to wax and wane with the seasons and you will need to consider the slow times during more prosperous times of year in order to survive. Without adequate cash flow, you won’t be able to pay vendors, payroll, or rent during the off-season.
Create a Statement
The first thing to do is create your cash flow statement to track money coming in and going out of your business. The aim is a positive cash flow year-round, to meet your financial commitments and responsibilities.
Forecast your Cash Flow
Once you have constructed your cash flow statements, you can develop a cash flow forecast for the next year. This will demonstrate the highs and lows of the company due to the season which helps you better predict and prepare. This also identifies if you need to figure out a plan to gain additional capital to supplement the slower seasons in order to survive. If you spot a potential issue, begin to apply for help and financing before it becomes an emergency; a cash flow forecast helps you do this.
Collect What is Due
To increase your cash flow, become more assertive about collecting what is owed to you. Have a payment policy in place that rewards prompt payment for service. Make payment arrangements short-term and aggressively go after outstanding debts. Be persistent with patrons that are slow to pay and request deposits on scheduled projects or products to generate more incoming cash.
Play with Payments
Play around a little bit with creditors in terms of extending payments a bit longer during the slower months. Stretch out payments during the off-season if the creditor is open to this to give you more time to collect from those that owe you, too.
Cut for a Cushion
Cut back and create a cushion for your business. Reduce what is going out and increase what is coming in to prepare for the slower season; it is as simple as that. Come up with creative ways to increase offerings during these times, while cutting down on services, subscriptions, and payments that you are making to help build your nest egg.
Get with a Program
Invest in an accounting software program, like QuickBooks, that is user-friendly and inexpensive. This software will help you create cash flow statements that allow you to monitor and assess your fiscal situation at a glance. This allows you to adjust and identify issues before they become financial crises.
Talk to a Professional Today
Remember that hiring a financial planner and accounting professional is the most prudent and practical way of sustaining and surviving during all seasons. Work now to preserve cash flow and build reserves for later. Don’t wait until times are tough to reach out for help; plan ahead and talk to the industry experts at BMH Accounting today.
Want to see improvement in your business or brand’s bottom line? Pay attention to your company’sFinancial Variables and discuss these influences with a qualified accounting professional to determine if your revenues can be improved, or to learn more.
Five financial variables that can improve your bottom line are:
1) Look at your Profit & Loss Statement
When was the last time you looked at your Profit and Loss (P&L) statement? This document lays out your revenues, expenses, and costs during a determined period of time.
All public companies are responsible for issuing these statements quarterly, as well as at the end of the fiscal year. Reviewing and understanding a P&L statement can help you evaluate your business’ fiscal health.
2) Know the Shape of your Finances
Over half of small businesses are negatively impacted by late payments; how are your finances? Make a resolution to pay invoices on time and save late fees and charges. These expenses impact your cash flow and bottom line, over time.
3) Get Familiar with Your Cash Conversion Cycle
The cash conversion cycle (CCC) measures the amount of time that it takes to move inventory, get paid, and, in turn, pay your own creditors. This cash flow determines how long between payments as well as how quickly you can turn-over your product.
A familiarity with your CCC can indicate if you have a healthy cash flow as well as how long your company can survive in tight times.
4) Become More Aware
Part of your business self-awareness comes from checking out your financials. Develop and revisit a cash flow forecast and business budget for your company.
It makes good sense to set aside a time, such as the end of the fiscal year, to review all your management practices and financial habits with a reliable and reputable accountant. Don’t have an accountant? Make now the time to retain one.
5) Tally Cash on Hand
Do you know how much cash and liquid assets you have on-hand? It may surprise you; sometimes, companies don’t have as much readily available capital as they think – and need- which could put you in a bind if business is slow.
Don’t risk the fiscal health of your company; take time to count up what you have on hand for liquid assets, i.e. cash, and begin to think about setting up a rainy-day fund.
Making changes or deciphering financials for your business can be confusing; make sure to discuss your options further with your accountant before altering the way you operate your company. These industry experts may be able to help guide and advise you on the best ways to reach a better bottom line.
Want to learn more about these financial variables, or other ways to enhance the condition of your company? Talk to the accounting professionals atBMH Accounting; they are familiar with financial variables that can make a significant difference in the overall value of your business investment.
Want the key to reaching your business and professional goals? ABusiness Strategic Plan helps develop and identify an effective strategy for attaining and reaching milestones that lead to the fruition of your goals. Here are some tips on how to create your own plan:
First, what is It?
A business strategic plan is a concrete plan that identifies your business goals as well as the steps for reaching them. Typically, these plans are comprised of five-year goals, but may even extend to 20-year objectives in some instances. These plans are detailed and specific.
Go Big or Go Home.
When you picture your company’s future, what do you see? Think about where you want it to be in the next five years- or longer. Identify these goals before you set about crafting your business strategic plan as you will need to outline the steps to reaching these very distinctive goals and dreams.
Part of this process also involves identifying your personal goals and what you want your life to look like down the road. Think of both short-term and long-term goals for yourself as a business professional.
Make an Honest Assessment.
Be honest and assess how your company is doing right now. Compile your business plan, mission statement, and any vision boards or objectives together with data like your financial statements; put it together in a folder or file for easy access and safekeeping.
Put it in Writing
The best business strategies are tangible and written down. Make a list of your goals in writing and keep them close by. Outline- and write down- the steps that you will need to make to reach them, and number these steps.
Be as detailed as possible and add details to different goals or objectives as they become clearer or closer. Cover all aspects and areas involved in making your goals happen, from soup to nuts.
Make It Measurable
You will need to measure your progress so make sure to be specific in goal setting with a way of measuring your success. Some indicators that measure your objectives may be increased exposure on social media, more followers, more ‘likes’, and increased online sales, for instance.
Stay on Top of It
Measure and review your progress consistently, every three months to start. This allows you to quickly change or adjust your approach as needed based on the results. Keep up with industry trends and the market you’re involved with to keep your business plan fresh and relevant.
Ready to develop your own business strategic plan to reach your goals? Talk to the tax and accounting professionals atBMH Taxes; they are prepared to discuss the best ways for reaching your goals while maintaining a healthy and prosperous business. Contact us online or Call to consult with an expert today.
It makes sense to consider Hiring an Accountant for year-round provision, rather than just at tax time. There are numerous benefits of hiring a year-round accountant for your business, and the cost is a prudent investment to make in your company, brand, or business.
Some benefits of hiring a year-round accountant include:
Managing Money
One of the specialized accounting services that accountants offer is money management. When you are in business, how you manage money can make or break your success. An accountant is a shrewd and smart resource that can help you manage money well.
Business Planning
The first step in starting a business is typically a business plan. Consult with an accountant for their input at this very critical phase of your company. An accountant can help outline the financial parts of the plan- and make sure that your investment is a pragmatic one with potential returns. They will be able to explain and navigate the processes associated with business loans and financing, too.
Setting-Up
Just getting started? An accountant can make sense of a wide range of bookkeeping responsibilities that you may not even realize you have. You will need to set up an accounting system and appropriate accounting software to implement this. An accountant can make the transition for you.
Growth
You may find that you are in over your head trying to maintain books as your company grows and becomes larger. An accountant can set-up payroll, benefits, and reporting systems so that it runs smoothly as your business burgeons. They may also advise you as to the best strategies to keep your company fiscally healthy.
Retirement
An accountant is an excellent ally when you are planning retirement. They can help you prepare in the years, months, or weeks leading up to leaving your job, and help advise you on your retirement plan options. They may also be able to guide personal investments that can grow and mature into your retirement savings. If selling your business in order to retire, they can be an invaluable resource during that often-complex process, also.
Tax Time and Audits
Naturally, you want an accountant on your team at tax time. An incidental audit can tie you up for weeks and cause you undue hassle and headache. Accountants are familiar with the process and can stay abreast of the most recent tax info that might make a difference for you at year’s end. Let your accountant deal with the IRS and you can focus on your business.
Consider the benefits of having a year-round accountant and talk to the professionals at BMH Accounting to learn more. From specialized accounting services to a tax time audit, don’t go it alone. Rely on the expertise of a reputable accounting firm; call to learn more today.
When it comes to Tax Planning, being proactive pays. Being vigilant and precise with your tax reporting and expenses can minimize your tax liabilities- and save you money at year’s end. Tax prep and documentation should not be something that only occurs at tax-time; proactive tax planning is something that happens year-round to avoid nasty penalties and maximize deductions.
Some tax planning tips include:
Provide Proof
Prepare to be vigilant about keeping track of business expenses- which can be a bear! A good rule of thumb is that if you plan to deduct an expense, you will need some sort of proof of the purchase, like a receipt, invoice, or canceled check. You can also use bank records, if needed, to document purchases related to business that you do not have an actual receipt for when it comes time to complete or file your taxes and reports.
Document Diligently
Always save invoices or receipts for all your business-related purchases. It helps to write and attach a note explaining the purchase for documenting later, when you may have forgotten the specifics surrounding the expense.
Segregate Accounts
Make sure to keep personal accounts separate from business accounts whenever possible. It can make accurate record-keeping nearly impossible and you could suffer by missing out on certain business deductions this way.
Classify Carefully
Don’t misclassify your workers as the income-tax withholding and employment taxes are quite different. While you do withhold federal income tax and FICA taxes from your employees, you also are responsible for unemployment taxes and your own share of FICA. When you are dealing with staff that are actually independent contractors, you are not required to withhold taxes, making the individual responsible for their own self-employment tax liability. This also eliminates the need to pay separate FICA or unemployment taxes. Talk to your accounting professional to learn more.
Pay Promptly
Pay the employment taxes that you collect from the wages of your employees and staff for federal income tax and FICA (Social Security and Medicare) taxes promptly. The IRS is not tolerant of delayed payment and noncompliance penalties can be severe.
Industry experts offer tax tips for small businesses, including that you need to be careful and cautious when making tax deductions. This may look suspicious and trigger an audit, further reinforcing the need for organized documentation. The IRS frequently assesses business tax deductions, like vehicle use and travel expenses, to ensure you are sticking to their guidelines and limits.
Consider Hiring Help
Take the worry out of your business taxes with some professional help from BMH Accounting. If you own or operate a company or brand, outsourcing your financials and tax reports to a certified accountant makes good business sense. Don’t risk penalties and fines by going it alone; hire a tax professional today.