Are you prepared for the upcoming transition to the new year, specifically 2024? It's a critical time for business owners to revisit the checklist of essential items we introduced last year. In this blog, we'll delve deeper into the significance of each item and how our team can assist you in ensuring that each box is checked. Let's start by revisiting some key items from last year's list:
Tax Returns and preparer
Financial statements and understanding account balances
Collecting vendor information - 1099s, w-9s
Scrubbing payroll liability accounts
Backing up data
Employee bonus program
Budgets and goals for the next year
Time management systems
We explore in more detail why these items are so vital and how you can successfully address them as you make the transition to 2024. Our focus will emphasize the approaching tax season, cash flow forecasting for the next year, addressing compensation-related questions, and refreshing your policy manual and handbook.
Tax Time: Preparing for the Inevitable
First on our list is the approaching tax season. Business taxes are complex, and staying compliant while maximizing deductions is essential. Depending on what state or county your business resides in, you may be subject to several taxes. A tax preparer comes in handy during this period. It's wise to reach out ahead of time to gain a clear understanding of your specific needs. Regulations change frequently, and professionals are well-equipped to keep you up to date on all changes.
Before meeting your tax preparer, lay the groundwork. A business's finances can become easily disorganized which in turn makes the whole process more complicated. This is where a firm like Primetrics can provide valuable assistance. We help you in collecting necessary information and organizing your financial records, including expense receipts, bank statements, credit card statements, and more. We are passionate about cleaning up the books, so they are accurate and ready for when that time comes. Moreover, we'll implement software to streamline future processes, providing you with a clean and organized system for future tax years.
Remember, there are significant benefits during tax time. For example, making contributions to a 401(k) or an IRA at the end of the year can lower your taxable income and reduce your tax liability. Be sure you're taking full advantage of these opportunities and always ask what are some other deductions you may be eligible for.
Forecasting Cash for Next Year: A Key Financial Strategy
With the new year approaching, another high-priority task is forecasting cash for the year ahead. A cash flow forecast should be a dynamic document that's updated throughout the year. To make this process more efficient, there are tools and experts available to guide you. Consult your financial team to determine the best approach for your business.
When creating a draft for your cash flow, begin with historical data, including cash flow and income statements. The historical data serves as a reliable baseline for your projections. Factors such as inventory management, growth projections, business changes, seasonality, and capital expenditures must be considered. After accounting for these elements, identify your revenue sources and estimate expenses. You always want a smooth financial journey, and this is one big step in the right direction.
Compensation Questions: The impact on the cash flow statement
As you plan for the next year, you'll encounter questions about compensation. Labor costs can vary, and the timing of these costs must be carefully considered. A solid understanding of how compensation impacts cash flow helps in maintaining the financial health of your business.
Here are some questions to consider about compensation when forecasting:
How much can I allocate for Employee Salaries and Wages?
How do I determine salary increases and bonuses?
What are some tax implications of compensation?
What are some retention strategies and incentive programs?
How do employee benefits impact cash flow?
Policy Manual and Handbook: Update and adapt to change
Ensuring Policy Compliance: Your policy manual and employee handbook are the compasses that guide your organization in terms of culture, expectations, and compliance. Industries evolve and regulations shift, so these documents must be regularly reviewed and updated for the team. In a world of ever-changing legal and ethical standards, keeping your policies current is not just a best practice; it's a necessity.
Empowering Your Team: Your team may rely on select documents for guidance in their day-to-day activities. Outdated or unclear policies can lead to confusion, mistakes, and potential compliance issues. Keep your policy manual and handbook up to date. It's an investment in empowering your team with the knowledge they need to perform their roles effectively and under the law. Also, new members may join the team which is another reason to keep the information up to date.
Reflecting Your Commitment to Excellence: Moreover, maintaining accurate and current policies reflects your commitment to excellence. It signals to your employees, partners, and clients that you are a forward-thinking organization that takes its responsibilities seriously. By regularly updating your policies, you complement the alignment with industry standards. As you approach the new year, remember that keeping your policy manual and handbook up to date is not all about compliance; it's about driving your business toward greater success and prosperity.
Approach the new year with confidence, it's important to adopt a comprehensive approach to these essential business tasks. With thorough preparation, expert guidance, and the support of our team at Primetrics, you can confidently check each box, setting your business up for success in 2024. If you have questions or need assistance with any of these items, don't hesitate to contact us. We're here to help you navigate the financial complexities of the business world.