It’s just shy of the end of July, so 7 months of the year are almost complete. It’s time to review what is happening in your business and see if any adjustments are needed to meet your goals. Based on what you find, you can make adjustments to prepare for a change in taxes due based on your profitability.
If you set a goal for the business in terms of revenue, how are you doing in relationship to that figure? If you are at 50% or better, that’s great! How much over your goal are you? Is this going to impact your taxes? Do you need to alter your estimated tax payments (if you currently have to file) to avoid owing a large amount later? Do you need to make equipment purchases or invest in other larger expenses you’ve been postponing to offset your profits? Now may be the time to consider making those purchases. You hopefully have some cash available from the income and can make those investments which in turn will reduce your overall profit and taxes due. Of course, talk to your CPA before making this decision to see if now is the best time to spend those dollars.
But maybe you’re finding that you aren’t on track to meet your goal. This can be due to sales lower than expected, costs higher than expected, or a combination of the two. Look at where you are spending money and see if there is a way to reduce some of these costs. There are expenses that are fixed (such as rent, insurance, payroll tax rates) but some costs can be affected by analyzing your spending to see where reductions can be put into place. Contact vendors to see if you can get a discount for paying more quickly, see if there is a way to run a process more efficiently (and therefore reduce the time or costs associated with the task) or see if the rates you are charging for your products and/or services are too low and need to be increased. Based on how far off your goal you are, you may want to look at your estimated tax payments and see if those can be reduced to keep more cash on hand. Schedule an appointment with your CPA to review your financial statements and determine if any changes should be made.
If you’ve been too busy to do your bookkeeping and you don’t have this information handy, it may be time to consider partnering with a bookkeeping company to assist you. If you are overwhelmed with this task, we are here to help. Contact us at 310-534-5577 or [email protected]. Let us give you peace of mind by removing this burden and allowing you to do the parts of the business you truly love!
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