It’s the 4th quarter!!! It's time to plan for the next year and get ready to wrap up this year, so here are 5 things to do in the 4th Quarter. Review Business Progress To Date Reviewing your business progress is important because as the business owner you should want to know how well your business performed. When evaluating your progress, compare your previous year's performance to your current year's performance. You want to know if you reached your target sales for the year, if your sales increased from the marketing strategies you've implemented, if you need to add more employees, if you need to cut costs, how to become more efficient, if you need to introduce a new product or service, etc. You want to know what works for your business and what doesn’t, so you can make the necessary business decisions to keep the operations of your business improving year-to-year. Review Expenses for Tax Deductions The end of the year is the time to review your expenses and make sure they are all accounted for. Tax deductions are like gold for business owners because it helps lower tax liability and helps save on taxes. Make sure you have accounted for and account for business expenses until the end of the year, so you can claim eligible expenses on your tax return. Collect Receipts Listen!! If you have unpaid invoices from clients that received products and/or services, then COLLECT your money honey!! Your business depends on those funds and you want to close out any invoices, so you don’t have to carry over unpaid invoices into next year. Complete Next Year's Budge All businesses should have a budget. Why? A budget helps you plan where your money is going and not your money telling you "Hey, this is where I'm going!" You are able to be more profitable when you establish a budget and develop a habit of planning. Be proactive by adopting a budget and setting a budget for your business. Establish New Sales Targets Setting new sales goals will help you to implement strategies to grow your business. As a business owner, you want evaluate your current strategies or seek new strategies to assist with reaching your new sales targets. This can be from increasing your price, to implementing a new product, to new advertising on new marketing platforms, opening a new location, and so forth. Each year you want to evaluate how your business can grow from where it's at now, so set new sales targets for next year so your business can continue to grow. As you review your business progress, review expenses, collect reciepts, set a new budget, set new sales targets, or do any other year end reviews, be proactive by setting time aside to plan for your business' success. Year to year you want to see all that was accomplished, so you can celebrate your wins! Blog Disclaimer: Readers should not rely on or take any action based upon the information on this website. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult a tax, legal, and accounting advisor before engaging in any transaction. The information on this website is public and is not individual advice. While we strive for accuracy, it is possible that the information on our site may contain errors and omissions. We disclaim any liability for any such errors or omissions. Moreover, we encourage you to contact us to dialog further on your issues or areas of interest. Schedule a consultation for an opportunity to obtain guidance in particular to your issue or area of interest. For any questions regarding this disclaimer, please contact us at firstname.lastname@example.org.
Mistake #1: Not Obtaining a Business Bank Account
Business Owner, “Hi, I’m looking for a Bookkeeper and I would like a quote for services.”
R. Payne LLC, “Sure, I’d love to assist you with that. Do you have a business bank account?”
Business Owner, “No.”
R. Payne LLC, “Why not? This is one big mistake you can make as a business owner.”
Business Owner, “Why is this a mistake?”
R. Payne LLC, “Well, as a business owner it’s best to keep business and personal finances separate.”
Business Owner, “Why? I mean, it’s all MY money?”
R. Payne LLC, “Yes, it is money you earned, but there’s more to it than that. Have a seat, and let’s talk!”
Ease of Tax Prep
When you file your taxes it’s hard to separate which are personal expenses and which are business expenses. When filing your taxes, you are able to take tax deductions allowable by the IRS. If you happen to overstate your tax deductions because you accounted for personal expenses as business expenses, then you can end up paying penalties for overstating on your business tax return. It is best to have your business finances and personal finances separate, it’s best NOT to use your business account for personal use.
Ease of Tracking Expenses
You are able to keep better track of your business financial activity when there are no personal transactions in the mix. Imagine having to sort through your personal and business life if they were all mixed together in one pot. You’d go crazy, right?! And so will your accountant or bookkeeper. This leads to the next point.
Having a business bank account provides business data to assist your bookkeeper in recording business activity for financial reporting. Accurate financial reports assist you as the business owner with making business decisions. If you have personal and business activity mixed together, then your business financials are not accurate when making business decisions.
Protection of Assets
In business legal issues can arise, so having a business bank account can help protect your personal assets. As stated previously, it’s best not to use your business account for personal expenses. If this is a habit you will hurt your business and your personal identity. Think about what personal assets you have and how these can be impacted the next time you mix personal and business expenses.
Business Owner Not Hobbyist
You want the IRS to know that your business is not a hobby, so that you can take advantage of tax deductions every year. However, they need to see you are making a profit. If you are in business to make a profit, then obtaining a business bank account is necessary.
Secure The Bag
If you want to be able to accept credit card payments from customers or have payments in your company name, then having a business bank account is necessary. If you decide to have a merchant account or automated payment processing for your business, these companies require you to have a business license and EIN number, which do not relate to a personal bank account. Also, when opening your bank account the names of the owners and the business name are on the account, so if clients pay funds to your business name, you are able to deposit those payments written in your company name. Unlike a personal, account this wouldn’t be possible.
Where The Money Resides
As you level up in your business, you may need more funding. You may look into business credit, loans, or other business funding for your business, right? Having a business bank account is important because to obtain “business” funds, you need a business bank account. By now you get where I am going with this, which leads to my next point.
Trusted Brand Image
As a business owner, you want to have a trusted and professional image of your business, so having a business bank account helps vendors, suppliers, customers, etc. see your business as a trusted and good brand in conducting business.
R. Payne LLC, “As you can see there are benefits to having a business bank account.”
Business Owner, “Yes, and thanks for explaining all of this. It was very helpful. So I guess I need to be on my way to opening a business bank account.”
R. Payne LLC, “Absolutely! Now, you’re off to a great start.