Getting Your Finances In Order
Written by: Eileen Lonergan
The start of October signals the Fourth Quarter, the last few months to hit your personal, professional and financial goals for the year. I wanted to share some advice on how to get your business finances in order so you aren’t stuck on New Year’s Day nursing a financial hangover.
1. Open an individual 401k also known as a UNIk before the year ends. You can put $17,500 from payroll deductions into it (if you are over the age of 50 you may contribute an additional 5k). In addition You can put 25% of profits (max out at up to $53k) into the retirement plan. Consult your financial advisor for help on getting this opened and funded.
2. Set your biz plan for 2014. Think of where you want to be a year from now and what you will need to succeed:
- More or less staff: if more, draft a detailed job requirement and post the position; give yourself plenty of time to find the right person. If less staff, how will you cover their work load and how much notice does your employees contract require you to give them before terminating their position?
- Do you need new tools? If yes, how much will they cost and can you afford them?
- Are you paying for things you don’t need? Premium subscriptions to Vimeo, Constant Contact, or Apps? See what you have on auto pay and make sure the expense is worth it to your daily operation. A couple of years ago I took a hard look at PayPal and realized the fees I was paying were pretty steep; now only use PayPal for international clients. A five minute review saved me hundreds the next year.
- Not good at defining goals? Consider a session or two with a Business Coach or Life Coach. It is hard for many of us to reboot ourselves; an objective opinion and clear eyes can provide valuable clarity.
- Do you need to terminate any client relationships? Think through how you will transition the client through the process.
3. Tax planning. Talk to your CPA about tax planning as well as the UNIk. Realizing you haven’t set aside enough money to pay your taxes can be a shock to your 2014 budget and seriously interfere with your plans. A chat with your accountant can give you a clear picture of your estimated tax bill. Note: it is really smart not to wait to contact your accountant; come tax season they barely have time to speak to their children! Don’t have an accountant? Most local business chambers of commerce have at least a few who are members. Mine offers any chamber members a complimentary one hour advising session.
4. Profit and Loss. If you haven’t been keeping up with your monthly balance sheets, do it now. Review your credit card statements and make sure your travel expenses have been submitted and any other outstanding invoices owed to you are paid.
I am lucky, my husband is also my Financial Advisor, and one of my clients is also a Boston based Business Coach who meets with clients via Skype. The business of my business isn’t my favorite part of tasks, but staying in business is pretty much a primary objective, so the above steps really are worth your effort!