December 2001
Amy E. Gibb, MBA,
CFPTM
Ready or not, the
end of the year is right around the corner and there are things your business
can do in the next 30 days to improve your finances, your profitability and
reduce your 2001 tax bill.
Get ready to boost
your future profitability. Yearend
is a great time to evaluate the financial services and systems you are currently
using. Are you letting too much cash
just sit in your bank account that is not earning you interest? Have you been paying overdraft fees because
you don’t have time to get a line of credit or transfer money from other accounts?
Are your banking services right for you or are you paying too much?
Check all
contracts to ensure you're getting the best deals: banking, insurance, telephone,
Internet access, office supplies, leases - copier, cars, inventory, etc. With
many companies you can negotiate a significantly lower annual cost if you
pay a year ahead. Consider what is
the best for your situation, to buy, to lease or to rent. Review inventory
for items that don't sell and find a way to get rid of them, thereby decreasing
inventory and warehousing expenses.
Now what about taxes? If your business
is operating on a cash basis, and you have extra cash or a line of credit,
pay your bills before yearend but delay the collection of receivables until
after the first of the year. The result
is lower income and higher expenses for 2001.
This will decrease your tax bill in the short run.
Are you planning
on buying equipment or vehicles in 2002?
It might make sense to make your purchases before yearend 2001. The depreciation expense related to these purchases
could decrease your income and your taxes this year.
How about a Retirement
or profit sharing plan? It might not
be to late to start or fund a retirement plan. Retirement contributions can save both the
business and the owners significant taxes.
Yearend strategies
are not a substitute for prudent financial management but used wisely and
can put some extra cash in your pocket. As
always, consult your tax and financial advisors for the best strategy for
your particular circumstances.
President, Money $ense
Amy@MoneySenseSolutions.com, 303.494.5362
Amy E. Gibb, President of Money $ense specializes in making businesses more profitable. She may be contacted at 303.494.5362, or for more information go to www.MoneySenseSolutions.com.