A Dirty Little Secret about the End of Year Review with Your Trusted Adviser Team

Throughout my years in business, I have learned that one of the most important things you can do to set yourself up for success is to surround yourself with people who are experts in their field. In my world working with business owners, such trusted advisors will include a CPA, a bookkeeper, a financial planner, a business consultant and a cash flow consultant or CFO. One of the “Dirty Little Secrets about Cash Flow” that may sound surprising is that most business owners are not holding their trusted advisors accountable. Think about your trusted advisers. Are you taking full advantage of what they have to offer?

Being Proactive Is Key

Going into the last quarter of the year, now is a great time to check in with your team of trusted advisors to help you focus on how to minimize your tax liabilities as well as optimize your cash requirements for the months ahead. What I am asking you to focus on is finding out NOW how much your tax liability will be for 2016, then looking at any tax strategies to help you offset this liability before the end of the year.

Most business owners trust their CFO and CPA to help them understand their financials the best, especially when it comes to tax time. A good CPA will be able to tell you how much taxes you will owe so you’ll know what kind of tax liability you can expect during the tax season, but there’s more you can do with this information. That’s where your cash flow expert can truly shine.

As the cash flow expert of a trusted adviser team, my job is to help business owners follow the money with a proactive view into the future. I’m not focused solely on a business’s taxes but rather on the movement of money within a business, including the taxes.

Don’t Wait To Get Hit With A Bomb

Let’s consider this scenario: A business owner finishes the year strong, expecting to file and pay taxes for 2016 the following April. During tax season, the CPA figures out how much taxes are owed, and because 2016 was so profitable, the business’s tax liability is larger than ever before. Surprise! That is a big bomb to pick up in April! How much will it hurt, and will the business owner be prepared?

My strategy is simple. Don’t wait until April to be surprised with a bomb! Instead, I recommend all business owners to meet with their trusted advisers now in the 4th quarter. This meeting should not be just with the CPA — expand the circle of advisors to include a cash flow expert and a financial advisor to create a comprehensive, proactive plan.

  1. First of all, the CPA should be able to tell you what your projected cash liability will be as of now for 2016.
  2. Based on that cash liability and the business’s projected profitability, the CPA should be able to give you an early estimate of what your taxes will be in April.
  3. Your financial planner can help suggest how much money they would like to defer for retirement strategies. (This includes adding a 401K plan, personal savings for children’s college, etc.)
  4. Now that you understand your tax liability and financial needs, your cash flow expert can begin planning a smooth road to tax time. How are you going to plan for this tax liability? How can you save money?
  5. Work with your cash flow expert to look for possible strategies to lower your tax liability while you still have time. For example, you could buy more equipment, but do you have enough cash to execute this strategy while sustaining your business for the foreseeable future? Your cash flow expert can answer these questions.
  6. Finally, with an estimated amount for your taxes, a strategy to lower your taxes and afford your tax liability, and a plan for your future cash flow, you’ll be fully prepared to sail through the tax season unharmed and stronger than ever.

If that sounds great to you, then all you have to do is follow the advice of this month’s Dirty Little Secret: Business owners must be proactive and hold their trusted adviser team accountable. Ask these three questions of your CPA and CFO today:

  1. “How much tax will I owe?”
  2. “What business strategies can I do to offset my taxes?”
  3. “Will I have enough cash to execute this business strategy and pay my taxes in April?”

With the cash flow experts at Centennial Revenue Management, we’ll ensure that your business has not just cash to end the year, not just cash to pay for taxes in April, but enough cash to sustain your business for eight months into the future.

To learn more about what a CFO can do for you, watch our video explaining how a CFO can facilitate important financial and operational conversations with your entire trusted adviser team.


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