Summer Financial Checklist For Small Business Owners

It may be summer, but you know that your business doesn’t take a vacation. Whether this is your busy or quiet season, the third quarter is a smart time to monitor your mid-year progress, make any necessary adjustments, and confidently head into the fourth quarter and beyond. Review this small business owner’s financial checklist for valuable tasks to add to your to-do list.

Forecast your tax payments

You want to avoid surprises when it comes to your taxes. Forecast your taxes for the rest of the year based on your current earnings and deductions. If you have accounting software, tracking and managing your financial picture is easy, and accessing reports on cash flow and your profits and losses is simple.

Plan tax savings

Take your tax assessment a step further by considering if there are ways you could reduce some of your tax liabilities. Are there any tax-advantaged changes you make before the end of the year? Some ideas for potentially lowering your tax bill include:

• Contributing to certain tax-advantaged retirement plans, such as a solo 401(k) or Self-Employed Person Individual Retirement Account (SEP IRA)
• Using your car for your business and deducting operating expenses
• Changing your business classification
• Purchasing equipment may make you eligible for the Section 179 deduction. You may be able to deduct the cost of the asset in the first year you buy and place the equipment in service.

Keep in mind some other possible deductions for expenses, such as:

• Advertising and marketing
• Rent
• Home office
• Travel
• Utilities
• Inventory
• Business meals
• Energy efficiency upgrades
• Salaries and employee benefits
• Professional and legal fees

Accounting software is an easy way to organize receipts digitally so you won’t miss any deductions. Depending on the software, you may have access to a receipt and expense tracker that syncs with your bank accounts, credit cards, and payment apps, captures receipts from your phone, and categorizes expenses.

Summer is an ideal time to get a handle—and ahead—on your tax planning. But if taxes aren’t your area of expertise and you don’t have an in-house accountant, make an appointment with a professional tax advisor for guidance.

Plan your reserves

Assess your Profit & Loss statement to ensure you have enough cash reserves to weather business storms or market downturns. It’s good practice to be prepared with a buffer or emergency fund to tap into in the event you have more expenses or less revenue than expected.

Rethink your business classification

Your business classification isn’t set in stone. If your current one isn’t the best fit for you—and it might not be if you’ve grown or been impacted by a new tax law—you might want to consider changing it. For example, if you’re a sole proprietor and want more liability protection and less personal liability, you can form an LLC or corporation. Or perhaps you want to change from a pass-through entity to a corporation for tax purposes.

Check your compliance

Running a business means more than appeasing your customers; you must also satisfy legal requirements. Review your records to ensure that you are staying compliant with federal and local regulations regarding recordkeeping and taxes.

For example, if you employ non-exempt workers—employees entitled to overtime if they work more than 40 hours in one week—you are required by the Fair Labor Standards Act (FLSA) to keep accurate employee records on the hours worked and wages earned. In the event of a U.S. Department of Labor investigation, you’ll need to have present records to prove you are in compliance.

If you sell goods, you’re responsible for calculating, collecting, and paying the correct sales tax. If you fail to collect or pay a sales tax, you will be subject to penalties and interest. While keeping track of the thousands of tax laws that vary by state and local governments can be confusing, a sales tax calculator can help.

Understanding the laws can be overwhelming and stressful, but accounting software often has features and mobile apps that can:

• Facilitate recordkeeping
• Track time worked and sync with payroll
• Add sales tax to invoices
• Automate sales tax tracking
• Collect tax for multiple tax agencies
• Create a Sales Tax Liability Report (STLR)

Reduce costs

Evaluate your business expenses for any areas where you could cut back. Even seemingly minor changes could make a positive impact on your bottom line. Ask yourself the following:

• Could you be overspending on supplies or vendors? Have you compared costs with other options?
• Are there less expensive alternatives for your insurance policies?
• Could virtual meetings replace some big-budget travel costs?
• Are there resources you have that you are not currently using? Could you sell or lease them?
• What technologies could you leverage to improve productivity and efficiency? Consider if a modest investment could make financial sense in the long term.
• Are your current sales, marketing, and advertising strategies bringing you the return on investment you want? Could you alter your tactics or media mix to achieve better results at a cheaper cost?

This mid-year review and checklist can help you understand the current state of your business and plan for the future. And while it’s always important to remain focused on your business, remember to take some well-deserved time off this summer to enjoy the fruit of your labor.