Happy New Year!

Too Soon...?

It's not too soon to be thinking about the new year if you're an entrepreneur!  Fall is the perfect time to be planning, strategizing and setting your systems up to meet your goals for next year!  Here are some ways to maximize fourth quarter for a strong 2016!



1.      Tax Planning – whether you did your taxes on time and April 15th is a distant memory or you're cramming to get your taxes filed by the last few minutes before the extension deadlines in September and October, tax planning in fourth quarter is always a good idea.  Take a look at your financial statement for 2015 to date.  Are you tracking at the same level of net income as in 2014?  If not, working with your tax planner to adjust what you are paying in estimated taxes or in withholding will pay off come tax time. 

There are also many things to do at year end that will effect your total tax bill.  been thinking about buying that new piece of equipment?  maybe bump that up to this year.  The tax advantages of purchasing property and equipment were extended for 2015. 

Making certain tax elections can also have a big impact – look at whether your company could benefit from being a cash basis taxpayer if you are currently an accrual basis taxpayer or vice versa.  Look at related party transactions to make sure your agreements are tax efficient such as in cases where you lease property from one of your entities to another.  These transactions are only counted for tax purposes if they are paid and received by year end. 

Wanting to make additional contributions through payroll to your company’s 401k?  employee contributions must be made by year end too.  You do have some additional time to contribute to IRA’s or to make employer contributions. 

2.      Budgeting – you’ve no doubt heard me talk about the importance of budgeting in a small business.  If not, click here to check out one of my posts to guide you through the process.  But it's equally important that you prepare your budgets far enough in advance to make them useful.  Preparing budgets in the year they are for is like having your football team show up in the second quarter of the game to play.  You lose your ability to effect the beginning of the year. 

Having a well thought out budget in place for next year prior to the end of this year allows you to make hiring and purchasing decisions to get the right team and inventory on hand to meet your goals.  It also allows you look at your company’s capacity.  Do you need more office space or equipment to handle any growth you see in your company’s future? 

Use this last quarter of 2015 to get your team invested in the plan too.  Henry Kissinger said “the task of the leader is to get his people from where they are to where they have not been.”  Maybe your goal for your company is a material surge in growth in the coming year.  Without the buy-in and commitment of your team as well as a common understanding of the goal, you will have a very hard time getting there.  Fourth quarter is a great opportunity to do the work of getting your team on board with your vision which is great for everyone in the long run.

3.      Cashflow Forecasting - one of the biggest urban myths in business is that cashflow is great when you’re growing.  It will be.  Eventually.  But in the first phases of growth, cash is going to be tight as you pay for more stuff to keep up with the increased demand.  That “stuff” comes in the form of everything from inventory to employees to equipment.  Then, when you do start to show profit, or more profit depending on where you are in your company’s life, you will shell out cash for more taxes or make payments to tax deferred plans to reduce the taxes.  All of which sap your liquidity.  It can seem like a vicious cycle. 

The best way to keep your sanity when juggling cashflow demands is a cashflow forecast.  We put these in place with many of our clients so they have a cashflow roadmap for anywhere from six months to three years out.  The forecast doesn't have to be complex but make sure you're looking out into the future when planning your cashflow needs and not just at the current balance in your checkbook. 

By spending some time in fourth quarter thinking about the coming year, you can hit the ground running come January and be that much closer to meeting your company’s goals for the coming year.  So, again I say, Happy New Year! 

Not sure where to start?  Need help getting these practices in place?  VAST loves proactive planning!  If you’re not feeling sure about your fourth quarter plan, call us!  We can help! 

To your company’s success!