With the holiday season underway, now is a good time to take stock of your small business finances and plan for 2016. Making time now to review your business’ financial health and update business plans will help you be better prepared for success in the coming year.
How profitable was your business in 2015? Are staffing needs being met? What goals are you hoping to achieve over the next 12 months? These are important questions to ask while preparing for 2016. Here are six tips to help you get started:
• Assess hiring needs. Are your business sales seasonal, or is your customer traffic steady throughout the year? Now is the time to make sure your business is fully covered. If you plan to hire new employees, be strategic in determining the type of position and candidate that will best suit your business. Develop a clear job description, post the job on appropriate job listing platforms, seek referrals from existing employees or fellow business owners, and hold effective phone and in-person interviews.
Also, make sure to stay apprised of changes to Affordable Care Act coverage mandates. Beginning in 2016, businesses with 50 or more full-time employees that do not provide health benefits to their workers will face a penalty.
• Conduct a financial review. Review expenses, analyze cash flow and meet with your accountant and banker before you close out your 2015 books. Ensuring you have categorized expenses correctly and understanding how much cash your business earned and how much you spent is key to starting the new year in good standing. A thorough financial review will keep your business organized, and put you in the best possible position to complete your bookkeeping and prepare your taxes.
• Update your business plan. A business plan should be reviewed as your business grows and evolves. Start by evaluating the list of goals you hoped to achieve in 2015 and document your progress. Consider using online business plan tools and examples to simplify the process.
For instance, Wells Fargo recently introduced a new, free resource on WellsFargoWorks.com: The Business Plan Center. Through this online tool, which is available to all business owners, both customers and noncustomers, you can create and update your written business plans and gain up-to-date insights on competitors in the market. Now is a good time to revisit your business plan, make any necessary adjustments, establish new goals and make sure your business is on track for the year ahead.
• Prepare for year-end tax reporting. Organize a meeting with your accountant to review your business revenues and expenses, and make adjustments to your budget as necessary. Evaluate your business tax records to ensure that everything is in order and familiarize yourself with tax filing deadlines so you can be prepared. Now is also a good time to discuss your estimated tax payments and understand if there’s anything you can do to minimize the taxes you’ll owe before the end of the year.
• Meet with your banker. Before 2016 begins, schedule an appointment with your banker and use this time to discuss your current business needs and review your accounts. Ahead of this meeting, review your business account revenues and expenses, your business credit balances, and determine whether your sales goals or hiring plans might require a new a deposit account, loan or line of credit.
• Plan for capital expenses. According to a recent Wells Fargo/Gallup Small Business Index survey, 25 percent of business owners plan to increase the amount of money their company allocates for capital spending over the next 12 months. Capital investments such as a company car, equipment or machinery may help you generate future revenue, yet may require tax deductions to be spread out over a period of years. Discuss any upcoming capital expenses with your accountant and banker so you can plan accordingly.
To start 2016 in the best financial position, it’s important to make time now to plan for the year ahead. Visit WellsFargoWorks.com for more tips, guidance and resources that will help you take your business to the next level.
Lester Romero is the Wells Fargo Small Business manager in Boulder City.