For kids, summertime brings “fun in the sun” with family vacations, beach blankets, and lazy days. For small business owners summertime is a great time to pause and evaluate where your business was, where it is, and what steps need to be implemented to get it where you want it to go.
Mid-year is an excellent time to review the past six months of your business year and plan for business taxes. You have six months of accounting history to compare to the prior year and see if your business is on track for planned growth. If you are aware, you will be able to do some budgeting adjustments, if necessary, like reducing costs in one area so funds are available to use for a newly identified need or avoid going into the dreaded ‘red’. During the review, tax planning can identify opportunities to set up a tax deferred retirement account, purchase fixed assets now rather than in a future year or postpone a planned purchase, and time vendor payables and customer receivables to achieve the best tax benefit for your business.
The biggest and often most costly mistake a company can do is to delay imputing valuable income and expense information until year-end or just storing deposit slips and receipts in a shoe box and giving it to the accountant to prepare the tax return. Setting up an annual process of a mid-year review makes you focus on the tasks necessary to record income and expenses, get caught up on bank reconciliations, and prepare a set of financial statements you will be able to understand so you can monitor your business and plan for success.