Once you’re done tackling your floors and closets, add one more to-do to your list: Your business finances.
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In the spirit of spring cleaning, Ameriprise financial advisor Michael Beriss shares his top five tips for small business owners looking to get finances in order.
No. 1: Prepare for next year’s taxes … now.
You may be patting yourself on the back for getting your tax materials off to your accountant on time – but don’t stop there.
“Ideally, what [business owners] would do is take this as an opportunity to look at their ways to save on taxes for next year … What can they be doing now, so that next April, there’s a lower number?” explains Beriss.
No. 2: Revisit your retirement plan.
In the vein of reducing your tax burden, Beriss says you should take a look at your business retirement plan. Depending on your cash flow situation, Beriss says it may be smart to contribute more to your and your employees’ retirement plans in order to cut back on taxes.
No. 3: Look at tax-free fringe benefits.
Aside from retirement accounts, there are a number of other benefits to offer that will reduce taxes for next year. Beriss suggests seeking out an expert to discuss benefits like life insurance, disability insurance, long-term care and health insurance.
No. 4: Examine your cash reserves.
“Plan for the unexpected,” advises Beriss. “It’s never a terrible idea to go out and build a cash reserve.”
To accomplish this, Beriss says you can either start saving regularly or take out a line of credit against your house, if you own your home.
“As long as it’s not abused and you’re not borrowing against your house every week, as an emergency reserve against some unexpected expense, it’s not a bad tool,” says Beriss.
No. 5: Reconsider your transition plan.
Beriss says it’s critical that all business owners have a business transition plan in place, should they become incapacitated or unable to run the business.
“If you don’t have a plan, you probably can’t transition properly, and you will lose that asset,” says Beriss.
If you already have a plan, that’s great news – but don’t cross this item off your list just yet. Beriss suggests taking the time to look closely at the plan you have in place, and see if it still makes sense for your business in its current state.