As we look forward to watching the ball drop in Times Square at midnight on Dec. 31 and the start of a new year, it’s a good time for small business owners to take stock of their finances and plan for 2015. By taking time now to assess your company’s financial health, you’ll be better prepared to achieve greater success in the New Year.
How profitable was your business in 2014? What goals are you hoping to achieve during the next 12 months? These are important questions to ask yourself today.
A financial checklist can guide you through the sometimes overwhelming process. Here are five tips to help get you started:
- Develop a financial plan – From establishing your annual budget to updating your sales projections, creating an actionable plan with defined goals will help you stay on target in the coming year. Start by reviewing the list of goals you hoped to achieve in your business at the beginning of 2014. Are you on track to achieve each one? Based on your progress this year, adjust your expectations and forecasts for the year to come. Need help developing a plan? Ask your business banker for assistance.
- Review expenses – Check all of your business accounts to make sure you have categorized expenses correctly. Take a look at how your costs compare monthly and yearly. Many expenses are tax deductible. An efficient expense tracking process will not only save you time, it could also save you money at year-end. There are a number of expense tracking tools for business owners available online and through leading banks and financial institutions.
- Prepare for year-end tax reporting – Meet with your accountant to review your business profits and expenses, and make adjustments to your budget as necessary. Evaluate your business tax records to ensure that everything is in order and be aware of tax filing deadlines so you can plan ahead. Now is also a good time to discuss your estimated tax payments and find out if there’s anything you can do to minimize the taxes you’ll owe before the end of the year.
- Analyze your firm’s cash flow – One of the most important things for a business owner to track is cash flow. How much cash did your business earn and how much did you spend? If you have trouble maintaining a steady cash flow to cover expenses, make sure your financial plan includes specific actions to remedy the issue, such as cost reductions or new revenue sources. Take time to ensure that you fully understand and can forecast cash flow, especially if you have a seasonal business.
- Meet with Your banker – It’s a good idea to meet at least annually with your banker to discuss your current business needs and review your accounts. To prepare for this meeting, review your business loan accounts to track payment progress, and reconcile your bank and credit card accounts so you can head into the New Year in good standing. Also, take time to anticipate how your sales goals or hiring plans might impact your need for a new a deposit account, loan or line of credit. Be prepared to discuss available options with your banker.
Setting aside time now to create a strong financial plan for 2015 is important for every business owner.
Vancouver resident Tawnie Nelson is a senior vice president for Wells Fargo. She manages the company’s small business lending operations in SW Washington and Oregon. She can be reached at 360.759.4820.