Here are Some Helpful Tips for Tax Time

Dreading tax time?  Take a deep breath, and reconsider.  Tax season can be a terrific opportunity to ramp up your business and profitability.  As you assemble your financial information, block out some time to…

• Clean up the accounting.  Like the back of a service truck, the accounting can get messy.  Extra accounts and rogue transactions.  Work with your bookkeeper and accountant and make sure every account is right and tight.  Shop for a new accountant if you need to. Route adjustments through the P&L when you can, and wrap up 2014 with an elegant, sound, audit-able Balance Sheet.  Make sure your tax return balances foot to your accounting system’s balance sheet balances.
• Reflect.  Ask the big questions:  What am I doing?  Why? Whom am I serving?  Who on the team is helping?  Who else do I need?  What are our goals and when do we want to achieve them?  How are we going to do it?  How much do I want to make?  How much should we charge?  These are the essential Business Planning questions.  Update your Biz Plan, or start one…over a weekend.   Craft your own plan, or be at the effect of everyone else’s.

If you do get a refund…

Good news!  You have some cash!

• Invest that cash in an asset that will help your grow your business.  Buy a new tool, or a downpayment on your next service truck.
• Use that cash to crank up your marketing efforts.  Keeping track of where your leads are coming from?  If so, double down on the primary sources of calls/clicks/customer contacts.
• Perhaps a website update could increase sales. 
• Re-brand and lay claim to your niche strength.
• Use that cash to invest in a class or course.  Expand an essential business skill, like accounting or a technical licensing program.
• Check out Wells Fargo Works for more business opportunities.

Bad news.  You probably didn’t make any money.

Raise your prices.  Put a budget together and set goals for sales and expenses, and figure out what you would need to charge per widget or hour to pull it all off.  Consider how you can sell more at higher prices by helping your customers get what they really really really want and need.  Theoretically, cutting costs can lead to higher profits.  But chances are good that you are not making enough salary and your current expenses are pretty thread-bare.  A price increase – and more sales at higher prices – are the best ways to boost profitability.

If you don’t get a refund…

Good news!  You were profitable.

Yeah!  Raise your prices anyway.  You will find good uses for increased profits!  The more you make, the easier it is to provide great service, and entice great team members with top drawer pay, benefits and working conditions.  Also, more money means you can make a mistake or two and without collapsing.

Bad news.  Perhaps you still need more cash.

Crank things up, and energize the Biz Plan?  Consider taking out a loan IF the money is going to essential biz-building assets, or for a focused, well-designed Marketing campaign.  Don’t get a loan to meet payroll or use for personal expenses.  If that’s the temptation, you will be racking up debt with no real hope of creating the dollars needed to pay it back.  You can work with your personal banker or check out some online options.  I recommend Kabbage Loans.

xo$, Ellen