We’re coming up on halfway through 2022 already. I know, it surprised us too! Did you know that the classic 1973 sci-fi film Soylent Green takes place in 2022? It predicted ecological disaster, global warming, and (spoiler alert) widespread unwitting cannibalism! We’re speculating on how well all of that matches with our current reality. (We do find ourselves wondering what they really put into that Soylent drink.)
Fictional (or less-than-fictional) dystopian issues aside, it’s time for a mid-year review of your financials. It’s good to check in on your business at least a few times during the year to make sure things aren’t getting out of hand. Even if your business is rather small, we recommend checking in at least once per quarter, if not more often.
The three main things we recommend checking mid-year are: Reviewing your Profit & Loss statement, ensuring you’re caught up on taxes, and checking in on yourself and how you’re doing.
The Profit & Loss Review
It’s never a bad time to review your Profit & Loss statement (P&L). This is one of the most important reports you’ll ever see when it comes to taking stock of your business’s health. Let’s go over some major questions to ask yourself when it comes to your Revenues (the Profit part) and your Expenses (the Loss part).
First, ensure that your business’s books are complete:
- Have all of your business transactions made their way into your books? If you’re using Quickbooks, you can do this through the Bank Feed feature.
- After taking in all of your business transactions, have you reconciled all of your bank and credit card accounts? If not, now’s the time!
After all business transactions have made it to your books:
- Do the numbers make sense to you intuitively, when you think about your business’s operations so far this year?
- Does anything in particular surprise you?
- Is your revenue going up or down, and do you know why?
- Are your expenses going up or down, and do you know why?
If your books are a mystery to you, rest assured that you can contact us and we can do your bookkeeping, business check-ins, and taxes for you. We can also send you a video review of your P&L in which we will mention any trends we observe and open a discussion on what to do about them.
Taking Time for Taxes
As a business owner, congratulations on working for yourself! However, there are so many “fun” new taxes for you to track and pay now than if (or when) you were an employee.
Because the IRS doesn’t withhold a portion of business income like it does employment income, as a business owner you are expected to pre-pay most of your federal income taxes throughout the year. It is not for us to determine whether this is fair, but it is our job to ensure that you know what you need to do (or we can do it for you if you want!).
If you didn’t make your first estimated tax payment already, by now it is definitely late. Not all business owners are required to pay estimated taxes, but if you were supposed to do it and you haven’t, you will owe interest and penalties. Don’t panic though! Check out our article on estimated taxes, or contact us and we’ll sort it all out for you.
Whether or not you remembered to pay your Quarter 1 estimated taxes on time, this is your reminder to pay your Q2 estimated taxes by June 15th!
In addition to federal estimated taxes, you are likely also on the hook for state and local Business & Occupation (B&O) taxes. Please see our article on B&O taxes for more information. Don’t forget to file these on time, because your state and possibly your city also have the power to charge you penalties and interest on late tax payments.
How are you feeling? Are you taking care of your needs?
Running a business is hard sometimes. It can feel like a lot of pressure to be the one who makes the big decisions, and, sometimes, the small decisions that can feel endless. Sometimes it’s hard to even know whether a decision is big or small.
As you probably know, the feeling of exhaustion that comes with making countless decisions is called decision fatigue. If you’re feeling this way, maybe it’s time to consider outsourcing your least favorite aspect of running your business. Maybe it’s time to plan a change in what you offer to your clients.
Or maybe it’s time for a vacation! You deserve it. If you’re not socking away some of your income for a vacation fund, we urge you to look into it. Saving for a vacation might be easier than you think!
TL;DR: We somehow made it through the first half of 2022! Let’s take a half-second to just take a deep breath and maybe pat ourselves on the back once or twice, if for no other reason than that we survived. Speaking of survival, it’s time to check on your business’s vitals by reviewing your Profit & Loss statement and ensuring that you’re caught up on taxes. But just as importantly, now is a good time to check in on your “emotional vitals.” If you’re feeling some burnout, it might be time for a change (outsourcing?), or maybe it’s time for a vacation. Scratch that, it’s definitely time for a vacation!