How to Stay on Top of Your Small Business Finances

Management consultant Peter Drucker said it best, “Efficiency is doing things right; effectiveness is doing the right things”. To help you make the most out of your available time, here is a list of key tasks each month that can help you maintain a sustainable operation, prepare for reporting to the IRS, and set the stage for future growth.

January

1. Establish your SMART (Specific, Measurable, Action-oriented, Realistic, and Time specific) business goals for the current year, focusing on the first quarter or first semester, depending on the nature of your goals. Review our guide on how to set, track, and achieve your business goals.
2. Create your budget for this year. Break down the year into months and get as detailed as possible. Since you’re going to access, update, and review your budget many times throughout the year, you need to keep your spreadsheet accessible. Review our guide on how to build a business budget, which includes a free budgeting template.
3. Sole proprietors and one-man operations: Pay the final installment of the previous year’s estimated tax using the fourth voucher from Form 1040, ES, Estimated Tax for Individuals by January 17th.
4. File all Forms W-2 for your employees by January 31st. You can file these forms fast, free, and securely online through the Social Security Administration’s website. This way you can take care of Form W-3, Transmittal of Wage and Tax Statements at the same time. Otherwise you will have to mail a physical copy of Form W-3 with Copy A of all forms W-2 to to the Social Security Administration.
5. Gear up for tax season (with our guide to help you manage and automate your finances before, during, and after April 18). Map out your schedule to pay state taxes, including sales and employment taxes. Every state has different rules and generally provide the option to pay applicable taxes every month, quarter, or year.  Find out your business tax requirements in your state or territory.
6. Employers: File Form 941, Employer’s Quarterly Federal Tax Return by January 31st for last year’s quarter ending on December 31st.

February

1. Issue all 1099-MISC, Miscellaneous Income forms to all independent contractors and freelancers to whom you paid at least $600 during the previous year by February 15th.
2. Track your previous month’s performance on your current SMART business goals, if applicable.
3. Compare your actual revenues and expenses for the previous month against what you budgeted  to help you foresee—and prepare for—any potential cash shortfalls.

March

1. S Corporations: File Form 1120S, U.S. Income Tax Return for an S Corporation for previous calendar year and pay any tax due. Furnish a copy of Schedule K-1 to each shareholder. File Form 2253 to elect S Corporation status beginning with current calendar year. For automatic six-month extension, file Form 7004 and deposit estimated tax.
2. Track your previous month’s performance on your current SMART business goals, if applicable.
3. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.

April

1. File your federal tax return no later than April 15th using Form 1040. If you were to need more time, than this date would also be the deadline to file an extension (just remember that it isn’t an extension to pay taxes—you still would be liable for applicable penalties).
2. Partnerships: file Form 1065, U.S. Return of Partnership Income and furnish a copy of Schedule K-1 to each partner. For automatic five-month extension, file Form 7004.
3. Make your first quarterly estimated tax payment for the current year on April 15th using the first voucher from Form 1040-ES.
4. Track your previous month’s performance on your current SMART business goals, if applicable. Use the learnings from the first quarter and apply them to potential new business goals for the second quarter.
5. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls. Now that you have a full quarter of budgeting data, it’s a great time to start planning ahead for the upcoming busy times of the year, such as the summer or the December holiday season. Here are some key resources for cash flow analysis and bridging cash gaps through financing:
   • A Crash Course on Cash Flow Management
   • How to Do a Cash Flow Analysis
   • A Complete Guide to Working Capital Loans
   • How Small Business Loans Can Help Seasonal Budgeting
6. Employers: File Form 941 by April 30th for the quarter ended March 31st.

May

1. Track your previous month’s performance on your current SMART business goals, if applicable.
2. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
3. Take advantage of fewer IRS requirements this month and review your personal credit score. Find out what is and is not working and set a strategy to improve it by the end of the year. Don’t forget to also build and maintain a healthy business credit score (yes, that’s separate from your individual credit score!)
4. Thinking about getting extra help for the busy summer season? Review the financial and tax considerations for hiring your first employee(s).

June

1. Make your second quarterly estimated tax payment for the current year on June 15th using the second voucher from Form 1040-ES.
2. Track your previous month’s performance on your current SMART business goals, if applicable.
3. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
4. Ensure that your email marketing comply with federal law. Why? For each email sent that violates the CAN-SPAM Act, your business can face a fine of up to $16,000, which, for some small businesses, could be devastating.

July

1. Track your previous month’s performance on your current SMART business goals, if applicable. Use the learnings from the second quarter and first semester and apply them to potential new business goals for the third quarter and second semester.
2. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
3. Employers: File Form 941 by July 31st for the quarter ended June 30th.

August

1. Track your previous month’s performance on your current SMART business goals, if applicable.
2. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
3. Consider refinancing high-interest credit card debt with a term loan. While air miles and points may sound like a good deal, a lower APR is a much better one. You’ll be able to pay back your debt faster and drastically reduce the interest on your current credit card debts.

September

1. Make your third quarterly estimated tax payment for the current year on September 15th using the second voucher from Form 1040-ES.
2. Track your previous month’s performance on your current SMART business goals, if applicable.
3. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
4. Thinking about doing a charitable donation in cash, goods or services, or volunteer hours? Plan it out now. While the deadline for any form of donation to be eligible for the current year is December 31st, you’ll have a better chance at meeting that deadline if you act now. Keep all supporting documentation because eligible donations are tax-deductible.

October

1. If you filed an extension earlier this year, then your deadline to file your income tax is October 15th.
2. Track your previous month’s performance on your current SMART business goals, if applicable. Use the learnings from the third quarter and apply them to potential new business goals for the fourth quarter.
3. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
4. Plan ahead for next month’s Small Business Saturday: set your strategy for this year, update your store layout for this big shopping holiday, and start reminding your employees and customers about your upcoming promos in store and through your website and social media presence.
5. Employers: File Form 941 by October 31st for the quarter ended September 30th.

November

1. Track your previous month’s performance on your current SMART business goals, if applicable.
2. Provide an outstanding experience to your customers on Small Business Saturday (the day after Black Friday).
3. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls.
4. Prevent identify theft by reviewing a free copy of your credit history at AnnualCreditReport.com and verify that all information is correct and up to date. Be on the lookout for accounts that you didn’t open, official records that should no longer be there, and listed mailing addresses that you don’t recognize. If you have an issue with your credit report, you can submit a complaint with the CFPB online or by calling (855) 411-CFPB (2372).

December

1. Remember that December 31st is the deadline to set up a retirement plan for your employees or yourself. This date is important so that any potential employer contributions to a retirement account before next year’s Tax Day (generally April 15th) or date of tax filing, whichever is earlier, still count towards the current year. Learn more at setting up a small business retirement plan.
2. Get ready your fourth quarterly estimated tax payment for the current year on January 15th of the next year using the fourth voucher from Form 1040-ES.
3. Track your previous month’s performance on your current SMART business goals, if applicable. Use the learnings from the fourth quarter and second semester and apply them to potential new business goals for next year’s first quarter and semester.
4. Employers: Remember to File Form 941 by next year’s January 31st for the quarter ended December 31st.
5. Compare your actual revenues and expenses for the previous month against those budgeted ones to help you foresee any potential cash shortfalls. Now that you have a full year’s worth of budget data, you’re in a great position to determine whether or not  you could take advantage of Section 179 Tax Deduction, which allows small and medium-sized businesses to purchase up to $500,000 in business-related equipment and write off the full cost of the expense that year. From a fancy new POS system to more efficient 3-D printer to a new set of tables and chairs for customers, you could make the necessary business improvements to kick butt next year!

asdfad