(BPT) - A challenge for any entrepreneur is getting access to capital. If you’re like many, you’re constantly looking for ways to reduce expenses and free up cash flow so you can be ready for anything, whether it’s a slow season or an opportunity to expand.
When tax season rolls around, you’re already taking a deep dive into your expenses and income for the past year. Don’t stop when you file. With all that information at your fingertips (and fresh in your mind), it’s a great opportunity to take a big-picture look at the health of your business and make sure it’s running as efficiently as possible.
Use the following tips to take your tax preparation efforts a step further and boost your cash flow in the upcoming year.
Dust off your business plan: No doubt when you started out in business, you were eager to put your vision to paper. Most entrepreneurs get busy with the day-to-day pressures of deadlines, and that vision can recede into the background. Schedule some time with your board members or business partners to revisit and update the business plan. Now that you understand the realities of your market, you should have plenty of ideas on creating the 2.0 version of your enterprise. When finished, it’s important to not allow it to gather dust again. Set goals and schedule check-in meetings with your team to make sure everything’s on track.
Update your budget: The nature of entrepreneurship is being agile in the face of change. Market trends, price changes from vendors and suppliers, effects of new laws and ordinances, even road construction are variable forces that can send anyone’s budget into a new direction. That’s why your budget isn’t ever going to be a spot-on prediction. Think of it as a plan. If you stay on top of it, you can spot the trends early and make adjustments right away so you can reap the full advantage — or head off problems before they become unmanageable.
Check your credit score: If you’re planning to raise capital to expand or make improvements in the next year, checking in on your credit score is an important first step you can take several months before you apply for the loan. Even if you have a business credit score, certain business loans still require a look at your personal credit score, especially if you’re a sole proprietorship. Visit Your.VantageScore.com to find free resources to learn your credit score. There’s also helpful information on what factors influence your score and things you can do that can help increase it over the coming months to help you get the best rate possible.
Create a tax strategy: The tax break Congress passed in December will save small business owners 20 percent on their tax bill this year. In the coming year, small business owners have many opportunities to capture more tax savings with the right plan and strategy. For example, if you’re planning a large equipment purchase, you may find yourself in a better tax bracket in 2019 if you time it before Dec. 31, rather than waiting until the following year as planned. Have a meeting with your accountant to discover more ideas.
Pay down debt: One way to use the windfall of your 20 percent tax savings is to pay down revolving loan debt. Doing so is a great way to raise access to working capital should you need it down the line. Depending on the source of credit, reducing your credit-to-balance ratio is one factor that could raise your credit score. Before you do so, make sure you have enough cash flow to meet your expenses.
Improve accounts receivable: If your business extends lines of credit to your customers, it may be worthwhile to implement a credit check policy on all new customers. Knowing they’re creditworthy before the fact can help you create the appropriate plan for them and protect your business. Credit reporting is also an effective way for even a small business owner to let customers know they are serious about collecting what’s owed. In the end, you’ll get paid faster and increase cash flow.
The life of an entrepreneur means things can change drastically on a dime. A thorough check-in with your finances can put you in the best position for success. To learn more about the tools and solutions offered by VantageScore, visit Your.VantageScore.com.
(BPT) - There are few things in life more feared than a tax audit. Just the thought of being summoned to appear before the IRS and going through tax returns and old receipts is enough to throw most people into a panic.
A 2016 survey conducted by Harris Poll on behalf of Hyatt Legal Plans, "Improving Employee Wellness through Legal Benefits," found that 46 percent of respondents that were audited in the last five years said that they needed legal support. Navigating through an IRS audit can be a stressful experience and, with recent research finding the hourly rate to use an attorney averaging $290 an hour, it can very expensive too, according to the National Law Journal and ALM Legal Intelligence, Survey of Law Firm Economics from 2013. Fortunately, many Americans may already have access to affordable help for IRS audits.
Here are some things that can make the process of an IRS audit easier:
* Good records
If you do end up being audited, you will likely have to produce receipts for the things you took as deductions, such as charitable donations or self-employment expenses, for example. As long as you've kept all important receipts over the years, you can feel safe knowing that you can show proof for any deductions. As a general rule, you should hold on to any receipts or important documents related to your taxes for up to seven years.
Whether or not you used an accountant to prepare your taxes, you may want to bring along someone to represent you before the IRS. Many accountants will do it if they prepared your return, but if you're going on your own, an attorney can step in and provide representation. Many attorneys specialize in tax matters and can provide guidance and expertise during an IRS audit.
* Have a legal plan
If the cost of using an attorney is intimidating, you can breathe easier if you are one of the many individuals with a prepaid legal plan through their employer that gives them access to attorneys for a low monthly fee. Legal plan members can contact attorneys for assistance with every step of an IRS audit, helping them to gather the necessary documents, discussing the audit process and appearing before the IRS if needed.
"Legal plan members can feel safe during tax time knowing that if the IRS ever comes calling, they have someone to turn to," says Ingrid Tolentino, CEO of Hyatt Legal Plans. "For as little as $20 a month, group legal plans provided through an employer cover using an attorney for nearly any tax issue that comes up, from tax collection issues to tax audits."
For more information about how legal plans work, visit www.legalplans.com.
To avoid scrambling as tax season draws to a close, here are some tips to help you prepare and file your taxes – even at the last minute.
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