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Fulton Bank
Fulton Bank

Small Business Money Moves

The start of a new year is a great time to re-examine your business finances to improve your financial performance. There are several key strategies to consider, questions to ask, and money moves that you can make starting today to improve your financial security and the success of your small business in the year ahead.

Evaluate your profitability

Start by looking at your income, P&L (profit and loss statement), and financial bottom line from last year, and be ready to answer these questions:

  • How much profit did you make?
  • What were your profit margins?
  • Was last year more profitable than the year before it?
  • Which areas or product lines of your business are growing and getting more profitable? Which investments should you re-consider?

Figure out where your profit is coming from. This will help you make better strategic choices for the year ahead. For example, if you have one product line that is outperforming the others, you could consider putting more marketing resources into that product. Or if you have an area where you currently have a small percentage of market share but that has potential for growth, you can make that a focus for the year ahead.

Clean up your accounting and reporting

Take a look at your books and balance sheet, and watch out for any issues in your accounting, such as:

  • Errors or incorrect amounts — Have all of your business income and expenses been tracked and counted?
  • Business expenses not getting tracked correctly or being assigned to the wrong category — Don't miss out on tax deductions because of an accounting mistake.
  • Outstanding invoices — Are any of your customers past-due on their payments to you? Send them a reminder, or see if it's still possible to collect payment on these invoices.
  • Missed payments — Do you owe money to any of your contractors or vendors?
  • Labor law changes — Are you correctly classifying your independent contractors as 1099 workers, or should they be classified as W-2 employees?

Do you need a refresher on some accounting basics? Even if you work with professional tax advisers, business accountants, or use accounting software to manage the details of your business finances, it's still a good idea for small business owners to have a general understanding of key concepts like a balance sheet and a profit and loss statement.

Boost your cash flow

Cash flow is the lifeblood of small business. There are various strategies that business owners can use to make sure they get paid faster and maximize the cash in their bank accounts:

  • Ask for better payment terms from your customers. Are you getting paid with net-60 or net-90 day payments? Even if it's a big customer that reliably pays their bills, slow payment terms could be putting a pinch on your cash flow. Look to renegotiate your payment terms, or consider offering a slight discount for early payment.
  • Accept payments via multiple methods. Are you still waiting for checks to arrive in the mail, or are you taking electronic payments, credit card payments, and mobile payments? There are many payment solutions available that can quickly put cash in your bank account and improve your cash flow.
  • Schedule payments in advance. Are you paying your bills too soon? Hold on to your cash for a little while longer by scheduling payments so that your bills get paid on time, but not one day too early.

Strengthen your retirement savings

Many small business owners get so busy with the day-to-day details of managing a business and reinvesting their profits into the business that they don't take time to think about their long-term financial future. Use the start of the new year as an occasion to think about retirement and boost your retirement savings:

  • How much did you save for retirement last year?
  • How much have you saved for retirement so far?
  • Are you on track to be able to retire, and at what age?
  • How much retirement income do you expect to have?
  • Are you already participating in tax-advantaged retirement plans for your business, like a 401(k) or Simplified Employee Pension (SEP) IRA plan?
  • What percentage of your pre-tax income are you saving for retirement? Can you increase that amount, even by a few percentage points?

Business owners have a variety of tax-advantaged retirement plan options to help you save for the future while managing tax liabilities. Use this new year as an opportunity to boost your retirement savings and invest in a secure future for yourself and your loved ones.

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INFO :

Our offices will be closed on Monday, January 21, 2019 in observance of Martin Luther King, Jr. Day. Mobile deposits submitted after 7 p.m. today (Friday) until 7 p.m. Tuesday, will have funds available on Wednesday.