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Archives for May 2018

Financial Flipside Podcast, Episode 10: The One About Money

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image via Stocksnap.io


For relatively small  bits of paper and metal, money carries a lot of weight. It is (supposedly) both the root of all evil and the key to happiness In our particular capitalist society, we both venerate and distrust people who have managed to acquire a lot of money. It is at once a source of anxiety and a source of comfort.  In short: our relationship with money is complicated.

In today’s episode, we engage in literal #realmoneytalk. We discuss the history of money, its power in our lives, and how the almost mystical power we’ve ascribed to money can make it really hard to talk about. We also touch on the consequences of not talking about money because it’s scary or taboo or because we don’t know how. We can’t promise to demystify money in half an hour, but we do have some practical tips for building a less fear-based relationship with the contents of your wallet.

 

Talk to us: What is your relationship to money? What did you learn about money when you were younger? Are there any things you’ve had to unlearn in adulthood? Let us know in the comments!

Missed an episode? You can find us on Apple Podcasts and Google Play. Looking for our  RSS feed? You can find it here. As always, show notes/links are below the cut.
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Do a Financial Review Mid-Year

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via Stocksnap.io

As we near the halfway point of the year, it’s time time to think about scheduling a mid-year checkup. No, we’re not talking about the height/weight/blood pressure kind of checkup, we’re talking about the income statement/balance sheet/cash flow kind of checkup — a review of your business’s financial operating fundamentals.

If you review your vital financial information only when year-end rolls around, you may not know there’s a problem until it’s too late. The more often you take your company’s “pulse,” the sooner you’ll be able to notice — and react to — changes in your business situation.

Check Your Vital Signs

What should you be looking at? Start with the operating fundamentals. For example, what’s the status of accounts payable? When’s the last time you ran an aging report for accounts receivable? How quickly is your inventory turning? What is your profit margin?

These numbers are critical to running your business. You can’t make accurate decisions if your figures are old. And, by keeping track of key financial ratios, you can more readily spot trends that should be addressed sooner rather than later.

Monitor Your Budget

Next, check your spending. If overspending is a problem, creating a comprehensive budget that establishes realistic guidelines is an effective remedy. Make sure you have a budgeted amount for every line item expense on your operating statement. Then track and compare actual spending to budgeted amounts on a regular basis.

Reduce Your Debt

Avoid the temptation to take out all your profits in good years. Instead, consider reinvesting some of those earnings in the business. Using retained earnings instead of debt to capitalize your business saves money — and provides a safety net that will be there to help you through periods of lackluster sales or unexpected expenses. A healthy debt-to-equity ratio will also look great when it’s time to borrow money or sell your business.

See a Specialist

Helping owners build and maintain healthy businesses is our specialty. Let’s schedule that mid-year review of your company’s finances soon.

To learn more about financial reviews give us a call today. Our trained staff of professionals are always available to answer any questions you may have.

As a Corporation You Need to Follow the Rules

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When you started your business, you may have formed a corporation to protect your personal assets from lawsuits against your company. However, you must also operate your business like a corporation — or risk losing the liability protection you expect to have.

No matter how long you’ve been in business, always treat your corporation as a separate legal entity. The corporation’s name should appear on company letterhead, checks, and invoices. Contracts should be made in the corporation’s name, not yours or another individual’s.

Avoid mixing your personal affairs and your corporation’s business. Maintain separate bank accounts and credit cards, and keep careful records of corporate transactions. File tax returns and pay any corporate taxes due on time.

Meet and Document

Hold shareholder and director meetings according to a regular schedule and keep official minutes of those meetings. Corporate minutes provide documentation of key financial and legal decisions, such as

  • Authorization for a substantial loan to or from the corporation
  •  Adoption of a retirement plan or approval to make a contribution to an existing plan (e.g., a profit sharing contribution)
  •  Issuance of stock
  • Purchase of real property or approval of a long-term lease

By observing the formalities, you can protect yourself and have the records you may need if the IRS, a creditor, or a company insider challenges critical decisions that were made.

Don’t get left behind. Contact us today to discover how we can help you keep your business on the right track.