The 3 Areas of Your Finances that Need Tending Before Q4 2020
As we move out of the 3rd quarter of 2020, 3 important areas of your finances need tending before Q4:
§ Financial Goal Reset
§ Credit Check Up
§ Annual and Estimated Quarterly Taxes
Throughout this pandemic I have seen businesses in 3 camps; those who have lost business, those who are doing business as usual and, those who have seen growth.
No matter your scenario, now is the time to revisit your goals before we move into the end of the year. Celebrate what you have been able to achieve in the first 8 months of the year, even if it was a small win such as receiving PPP or EIDL funding.
Financial Goal Reset
Given your current customer base, marketing efforts and business plans,
§ Imagine what is possible in terms of revenue from now until the end of the year;
§ Given the price of your products or services, back into the # of sales you need to make that revenue goal.
For example, if you think you can make another $100,000 before the end of the year and you sell three services at $999, $3,000 and $5,000, consider how many leads you need to generate AND close for each service in order to meet your goal.
Service A $5,000 x ______ =
Service B $3,000 x _______=
Service C $999 x ________=
These new numbers plus what you made in the first half of the year will become your new forecast for 2020. Write down the goal, make it plain and communicate it to your team, mentors and executive coaches so they motivate and hold you accountable until the end of the year.
Credit Check Up
Check your personal credit score and credit report every quarter to make sure that what the credit agencies are reporting is correct. This is critical since many small business owners use their personal credit to get access to financing to fund the business. Creditkarma.com is a great site for monitoring your credit.
Establishing and actively managing your business credit is also important. It will help to secure financing with banks and suppliers at better terms as well as protect the business against identity theft.
Keep in mind that it takes at least 10 years to build a business credit profile independent of your personal credit profile. If you have not already done so, take these 5 practical steps to establish and manage your business credit.
Annual and Quarterly Estimated Taxes
September 15 is the due date for the 3rd quarter estimated tax payment. Be sure to check with your CPA how much that estimated payment should be in order to avoid an underpayment penalty from the IRS.
September 15 and October 15 are also the final due dates to file the prior year’s tax return. Instead of feeling anxious about it and getting into the tax filing blues, take action!
Here are 5 steps to relieve your tax deadline blues.
#1. Set up an appointment with your CPA right away to discuss what they need from you to make this process as smooth as possible.
#2. Make sure all of your financial records are captured and up to date in an accounting system. Have the bookkeeper check it for completeness and accuracy and reconcile all bank and credit card accounts so the balances tie to last year’s final statements.
#3. Gather the final statements and back-up documents that show the balance on any loans or other debt.
#4. If there were changes in payroll companies in the middle of the year, send the CPA the final payroll reports from the prior company as well as the last payroll reports for the tax year.
#5. Prepare a list of all equipment, machinery, furniture, computers or other assets that will last more than a year and still have value. Note a description of each item, year purchased, original cost of the item, and its replacement value as of the end of the year.
Once you’ve followed these five initial steps, you’ll be on your way to getting your 2019 return filed with accuracy. Your CPA will thank you in the end.
In a year filled with uncertainty, taking steps to calculate and project your estimated earnings for Q4 will give you the clarity and peace of mind you are looking for.
Despite how it may feel, you are not alone. Click here to schedule your free 30-minute consultation so we can walk through this together.