I love October. It’s the kick-off to the holiday season, there’s still enough time left in the year to make course corrections in my annual goals, and the world turns burnt orange.
Business owners can use this time to evaluate where they are and what more they want to accomplish before the year is over. This list contains some tasks that really should be done year-round but, let’s face it, work and life get in the way. If your August was full of fun in the sun and vacations and then your September was full of adjusting to new school years for the kids and all the other activities of daily life, maybe now will be a good time to sit down and go over these financial items.
Things to consider during the month of October
Bank accounts reconciled
I know this is something you do monthly, right? OK, at least it’s something you plan to do monthly. Regardless of how on-top of it you are, sit down and make sure your accounts are reconciled. This is also a good time to go over your “Ask my accountant” account and get these questions answered.
Accounts receivable aging
It isn’t uncommon to have a few customers or clients who get delinquent. Maybe they were so busy the past couple of months that they forgot to mail you that check. This is a perfect time to review any outstanding receivables and follow-up with your clients to get paid for the work you’ve already done. If you wait much longer, you might not get paid until the following year.
Employee classification
This is a big topic this year. The Tax Cuts and Jobs Act made it much more lucrative for someone providing a service to be treated as an independent contractor instead of an employee. However, the rules of how to classify that person have not changed. Make sure you identify anyone who qualifies as an employee and that you are really treating them as an employee.
While you’re in the HR mindset, make sure you have your employee’s and independent contractor’s information updated. This will make it easier to issue your W-2’s and 1099’s to them in January.
Review Budget to Actual financial status
You created a budget back in January (or early 2018) didn’t you? This is the perfect time to see if you are on track to meet your annual goals. If you didn’t create a budget, have no fear, you can still review your financial activity and compare it to 2017 amounts. This will give you a benchmark of how far you’ve come this year and what you need to focus on for the next three months.
In particular, review your revenue accounts and see if you’re increasing in some areas or decreasing in others. This might help you identify products or services that need to be tweaked or that you need to focus on.
Once you’ve reviewed your revenue, look at your expenses. Are they in line with budgeted or prior year amounts? If not, why did they change? Are there any that look really out of whack? Investigate the cause of this now so you aren’t surprised at the end of the year.
Final Thoughts – Tax Planning
Like I mentioned at the start of this post, you should (or at least could) be doing this year-round but now is the perfect time to reset your focus on your financial performance. You still have time to make any adjustments before the end of the year to have a successful year. This is also a perfect time to schedule a year-end tax meeting with your tax professional. I like to meet with clients in the fall so we can project their business and personal income tax liabilities for the year. This helps you plan for how much cash you’ll need and makes sure you’re up-to-date on your estimated tax payment requirements.
If you don’t have a tax professional, please feel free to contact me. This is the perfect opportunity to get everything in order so your 2018 taxes are not a big surprise next spring.