4 Tasks to Prepare Your Practice for Financial Success in the New Year
In a few weeks, we’ll all be making resolutions for the new year and the new decade. In order for your practice to walk into the next year with its best foot forward, there are a few loose ends we recommend you tie up in December. If financial success in your practice is on your list of goals next year, we have a few simple measures you can take to help you ring in your best year ever.
1. Create a Budget
While we think any time’s a good time to create a budget for your practice, the end of the year is probably the best time. There’s almost a year’s worth of data for you to review and assess, and you have the whole new year ahead of you. Go into 2020 with a financial plan for your business, complete with provider goals, revenue expectations, and expense planning. Using your budget in the new year will help you make decisions, predict cash flow, and understand if you’re performing how you expect to perform. Remember, failing to plan is planning to fail.
2. Organize your financial records
Managing your financial records is critical throughout the year, but those records need even more attention at year-end. If you haven’t been keeping good records during the year, organize what you do have and engage the services of a bookkeeper to begin working on your books. Don’t wait until tax time.
We recommend using software like Quickbooks or Quickbooks Online to track your income and expenses during the year. If you’re using Quickbooks, but don’t really maintain it during the year, consider hiring a bookkeeper to keep your financials up to date on an ongoing basis. Knowing your financials are current and accurate will allow you to make financial decisions faster and easier.
3. Obtain a Tax Projection
If your books and records are up to date, work with your CPA to review your financials and estimate your tax liability. Year-end tax planning provides the perfect opportunity to make sure you’ve paid in enough taxes during the year. And, if you haven’t, it gives you a little more time to plan before April 15th. By reviewing your tax situation before your taxes are being prepared, there’s time to make decisions in your practice that could reduce your overall tax liability. It also reduces the chance of being surprised by a tax bill on April 15th.
Staying current with your financials reduces tax surprises. If you’re not current, consider getting organized, and then staying organized, as we’ve already discussed.
4. Purchase any Needed Equipment Before Year-End
If you’re considering purchasing a laser, a new chair, or any other equipment for your office, consider installing and using the equipment prior to year-end. Tax laws, including section 179 and bonus depreciation rules allow equipment to be fully deducted in most cases. We’re not saying buy equipment you can’t afford or don’t need. (You’ll know you can afford it if you’ve worked through your budget.) Purchasing substantial equipment before year-end can be an effective way to slash your tax liability.
The holiday season is a busy time, and we know you have a lot on your to-do list. However, carving out some time in the final weeks of the year out to focus on the financial health and goals of your business will prove to be is one of the best ways to set yourself up for another year of financial success.