For most of the country, the dog days of summer are setting in and between heat, bugs, and the errant thunderstorm, it’s easy to see that summer is here … and you know what that means – so is the beginning of the third quarter.
It’s time to take a hard look at where you and your business are based on your earlier projections and, just as importantly, do you need to stroke a check to the IRS?
The answer, most likely, is yes. Why? Well, money has never been cheaper and despite the mythical idea of rising interest rates, it is going to stay cheap. Depending on the size of your company and the size of the checkbook, when the summer is here, a preemptive strike on your tax liabilities can help to keep your leverage strong through the third and fourth quarter.
Now, bear in mind, this is not the case for all companies. It is critically dependent on the specific place occupied by your business financially right now. This, of course, demands a little more than a wild guess based on your accounting software or bookkeeper, but projecting forward through the end of the year is really an accounting question, and as such, I can’t help but recommend we sit down, face to face, and understand the state of your business and see if it’s better to write the check or wait a quarter.
At the same time, this is an important opportunity to look at where the business’ cash flow is going and what those projections look like. After all, the ability to write a check implies that the writer has money. If you have questions about your actual cash flow (as opposed to your bank balance), now is a perfect time to sit down to discuss if the tax plan we designed is still the right one for your company. In a larger company, of course, this is the responsibility of the Chief Financial Officer, but so few small companies have such an officer, so it falls back on the owner and the CPA to understand where – and if – the projections are accurate.
Remember, you can have all the money in the world in receivables, but if the check is only “in the mail” and not in your account, it’s hard to run a company effectively. In fact, insolvency is the number one killer of small business in the U. S. today and what makes it worse is that it is usually unseen until the very end. Other problems mask it while, in reality, it is the one striking the fatal blow.
Make the time this month to get a fiscal checkup on where you and your company are thus far this year and see if the situation requires any changes in tactics for the rest of the year.
Please get in touch with Patrick LeClaire Enrolled Agent at 407-287-6638. We can meet via Skype contact my office for details.