As the owner of a small business, you know how important the midyear period is. It’s the time of year when you can review your progress year-to-date, while making adjustments designed to help you maximize profits between now and the end of the year.
Depending on your resources and goals, your approach may include making long-term investments, or it may be a matter of making sure your financial ducks are all aligned and working efficiently and effectively, especially when it comes to minimizing your tax burden.
In this post we’ll review five key investment and tax tips for business owners like you.
1. Simplify and consolidate your investment accounts
If you’re like many business owners, you may wake up one day and realize that you are spending too much time trying to keep track of multiple investment accounts. It happens more often than you may think.
You may have a few different 401(k) accounts from the employers you worked for before striking out on your own. Or possibly you’ve got several IRA accounts from different stages of your career. Whatever the case is for you, consolidating your various accounts will streamline your investing significantly and make it easier to track your returns. For most people, consolidating is as simple as rolling over any 401(k) from previous employers or moving your traditional IRAs into one.
2. Review your current tax strategies
Conducting a midyear tax review is essential because you still have time to address any issues, or modify your strategies well before year’s end. Break out your business’s financial statements, including your profit and loss statement, payroll breakdowns, as well as tax returns from prior years and review them to help you and your accountant identify tax-saving opportunities.
3. Explore new tax strategies
While your approach, whatever it may be, may be working for you, there may be additional strategies that could reduce your tax obligations even further. Strategies you may want to dig into and learn about may include entity structures, retirement planning, ways to maximize deductions and more. And getting the basics of these strategies could be as easy as listening to a podcast or watching a YouTube video. Whatever you do, however, be sure to discuss it with your tax professional before implementing it. After all, avoiding an audit may be the best tax strategy of them all.
4. Expand and diversify your investing
If your business has hit its stride and is producing a large enough cashflow that you find yourself with excess cash on hand, you may want to look at diversifying your investment portfolio. Adding commercial real estate holdings to your investments can provide you with significant tax benefits. In addition, properties such as small office complexes, retail space, warehouses, and apartments can provide you with the kind of steady, ongoing income that can help build wealth as well as help your business ride out any bumps it may encounter.
5. Take time for YOU
Running a business takes a huge commitment of time and energy so it’s not unusual for small-business owners to expend so much effort and focus on their businesses that they neglect to care for their most important asset: themselves. That’s all well and good to a point but self-care is vital for any business owner looking to give the best of themselves to their venture for the long haul. Whether you just take the time to get an annual check-up, indulge yourself with a spa day (everyone, regardless of gender, can benefit from the therapeutic benefits of a massage; and don’t knock a good old mani-pedi or facial until you’ve tried one) or take a continuing education course at a local college, the key to investing in you is to TAKE THE TIME.