Tag: <span>Small business owner</span>

The start of a new year brings a fresh opportunity to set goals and create a roadmap for growth. For business owners, establishing solid financial resolutions can be a game-changer, enabling better decision-making, improved cash flow, and long-term success. Here are some essential steps to start the year on the right foot and make 2025 your most financially healthy year yet.

1. Set Clear Financial Goals

Defining clear, measurable financial goals is the first step toward making improvements that last. Ask yourself these questions to get started:

  • What do you want to achieve financially this year? This could be increasing revenue, reducing expenses, or building up a reserve fund.
  • How much do you want to grow? Quantify your goals (e.g., “increase net income by 15%”) to measure progress.
  • What are your short-term vs. long-term goals? For example, a short-term goal might be reducing outstanding debts, while a long-term goal might be expanding your business into new markets.

Having a clear vision of where you want your finances to be will help keep you focused and motivated throughout the year.

2. Review and Update Your Budget

Your budget serves as the foundation for all financial planning, making it essential to review and adjust it regularly. Here’s how to start the year with a budget refresh:

  • Evaluate last year’s budget. Look at areas where you overspent or underutilized resources. Analyzing past performance can offer insights into more realistic budgeting.
  • Identify necessary adjustments. Consider any planned changes, such as hiring new staff, investing in equipment, or changing vendors, and incorporate these into your budget.
  • Create flexibility for unexpected costs. Build a contingency fund within your budget to manage unforeseen expenses without disrupting cash flow.

Maintaining an updated budget keeps your business on track and highlights areas where you can potentially cut costs or invest more.

3. Conduct a Cash Flow Check

Cash flow is the lifeblood of any business, and ensuring that it’s steady is essential to financial health. Start the year with these cash flow best practices:

  • Analyze last year’s cash flow trends. Identify months where cash flow was tight and develop strategies to prevent similar issues in 2025.
  • Establish a cash reserve. Aim to have three to six months’ worth of operating expenses saved to cover slow periods or unexpected challenges.
  • Improve accounts receivable processes. If you frequently experience delayed payments, consider implementing clear payment terms, offering early payment discounts, or charging late fees to keep cash flow consistent.

4. Optimize Expense Management

Even minor reductions in spending can significantly impact your bottom line. Take time to assess your expenses:

  • Identify non-essential expenses. Review expenses for areas where you can reduce or eliminate spending without impacting quality or productivity.
  • Negotiate with vendors. Reach out to key suppliers and service providers to see if you can negotiate better terms or take advantage of volume discounts.
  • Automate recurring expenses and payments. Streamlining regular expenses reduces administrative workload and can help prevent costly late fees.

Effective expense management leads to a leaner operation, freeing up more capital for growth initiatives.

5. Invest in Financial Management Tools

Utilizing the right tools can make financial management simpler and more accurate. Consider the following investments for 2025:

  • Accounting software. Programs like QuickBooks or Xero help track income, expenses, and cash flow while simplifying tax preparation.
  • Payroll automation. If managing payroll manually, consider automation tools that ensure accurate tax withholding, reduce errors, and streamline reporting.
  • Budgeting apps and forecasting tools. Many software options offer forecasting features to help visualize the impact of various financial scenarios on your cash flow.

Digital tools improve efficiency and help you make informed financial decisions, especially as your business grows.

6. Revisit Pricing and Profit Margins

Periodic pricing reviews are essential to ensure you’re charging what your products or services are worth. To start the new year strong:

  • Analyze profitability. Review each product or service’s profitability and consider adjustments if profit margins are lower than desired.
  • Research market rates. Ensure your pricing is competitive without undervaluing your offerings. Consider the value you bring to customers and adjust prices as necessary.
  • Communicate pricing changes effectively. If you decide to increase prices, communicate changes clearly to clients, emphasizing the value and quality you deliver.

By aligning your pricing strategy with your goals, you can increase profitability and create a sustainable business model.

7. Prioritize Tax Planning Year-Round

Tax planning isn’t just a year-end activity—it should be integrated into your financial strategy all year. Here are some ways to stay tax-efficient:

  • Review potential deductions and credits. Familiarize yourself with any new tax regulations or deductions for 2025 that may benefit your business.
  • Evaluate business structure. As your business grows, certain structures may offer tax advantages. Consult with a tax professional to ensure your setup is optimal.
  • Plan for quarterly tax payments. Avoid year-end tax surprises by making timely estimated payments and keeping detailed records of expenses.

Strategic tax planning can save your business money and reduce stress when tax season arrives.

8. Commit to Regular Financial Reviews

Finally, commit to regular financial reviews as part of your business management. Set aside time monthly or quarterly to assess your financial health, adjust your goals, and refine your strategy. During these reviews, focus on:

  • Tracking progress toward your financial goals. Are you on track with your budget, cash flow, and profitability targets?
  • Evaluating key performance indicators (KPIs). Metrics like profit margins, debt-to-equity ratio, and return on investment (ROI) give insights into your business’s financial health.
  • Adjusting strategies as needed. Economic conditions and business needs can shift. Regularly reviewing your finances helps you stay adaptable and ready to seize opportunities.

 

Improving your business finances in 2025 starts with setting actionable goals and committing to regular, disciplined financial management. By taking the time to refine your budget, optimize cash flow, and ensure tax efficiency, you can create a solid foundation for a prosperous year ahead. Here’s to a financially healthy 2025—one goal, one improvement, and one successful quarter at a time!

If you own a small business, you need an accountant. Small business owners tend to file their taxes with a free online tax services year after year, but a digital solution can only take you so far. A tax accountant, or should we say a real accountant is an essential part of your small business team.

But why make the switch now? COVID-19.

Various COVID relief bills were passed in 2020 and 2021, which mostly affected the small business sector. With these new bills and laws, some of the previous ones passed were then overturned, making this years 2020 business taxes a little more complex. You certainly want to talk to an accountant if your business qualified for some of the various forms of government and private support and tax benefits this year.

The various forms of government assistance and tax benefits announced in 2020 were unbelievably confusing.

Here are just a few of the government programs and policies that might affect your 2020 small business taxes:

  • Paycheck Protection Program
  • Economic Injury Disaster Loans and EIDL loan advances
  • Employee Retention Credit
  • Any support from other governments or organizations

But a good accountant is more – much more – than a tax preparer. A good accountant is your small business advisor, not just a tax advisor. He or she should be able to help you deal with all the major financial issues your small business faces and advise you on how to insure your personal financial well-being. Our accountants at Loeffler Financial Group can help guide you on how to handle the financial matters, including the accounting and money handling systems of your business. Our team also will help guide you on ways to structure investment, personal loans, and losses to get not only the best tax treatment but to better manage my cash flow.

  • What kinds of taxes will I have to pay? What are my tax deadlines?
  • How can I reduce my taxes?
  • Which expenses are deductible, non-deductible or have to be depreciated?
  • What kind of bookkeeping system should I set up?
  • How can I set up systems to reduce the possibility of theft or embezzlement?
  • How should I pay myself and what are the tax implications?
  • Should I use the cash or accrual form of bookkeeping?
  • Do I need to keep track of inventory? If so, what method do I use?
  • How do I handle payroll and payroll taxes?
  • Do I have to collect sales tax? When? From whom?
  • What kind of retirement program can I set up and how much can I contribute each year?
  • What other accounting and tax considerations are there for my type business?

 

A good small business accountant can save you more money in the long run, and help you lower your taxes!  Although the deadline for taxes has been extended to May 17, 2021, you want to start gathering your files, and book your appointment today!