It’s hard to believe, but the end of 2019 is nearing, and business owners have multiple items to address.
One of the most important things owners can do is make an appointment with their tax professional now — before tax season — so they won’t be surprised by an unwelcome and hefty tax bill. If given enough time, an accountant can advise whether additional allowable business purchases can be made to reduce any tax liability.
For an accountant to accurately assess the finances of a business, the books must be in order. It can be a very easy task if income and expenses have been entered in a regular and timely manner. If not, the owner has a big job ahead, and it may be very wise to hire a bookkeeper as it essential for this to be completed right away.
Thoroughly evaluate financial statements which include the following three common documents. If unsure how to generate these or interpret the information, ask the accountant for assistance. Reviewing this information should occur on regular intervals instead of just once a year so adjustments can be made, helping to ensure profitability and growth.
• Balance sheet: This includes business assets, liabilities and equity and provides a snapshot of how the business is doing at a specific point in time.
• Income statement: Is the business profitable? The income statement itemizes expenses and revenues and quickly tells the owner if the business is showing a profit or loss during a selected time period.
• Cash flow statement: An illustration of how money is flowing in and out of a business from operating activities (income and expenses) and assets purchased and sold.
It is also not too soon to begin planning for 2020. If you have a business plan, spend time reviewing it and ask whether it accurately summarizes the objectives with specific plans and budgets to achieve stated goals. Perhaps there are new opportunities on the horizon that will necessitate a change in operations, additional key employees or financing. On the other hand, if there is no business plan, now is the perfect time to create one. There are many online resources available, and capable business advisers at a local Small Business Development Center can assist.
Benjamin Franklin is often credited for the following quote, “If you are failing to plan, you are planning to fail.”
Small business owners should take that to heart.