I won’t say I told you so, but I’m certainly thinking it: Beneficial Ownership Reporting requirements are back on as of last week. In the words of a friend of mine, “You’d think they were planning a trip to the Caribbean with the amount of flip-flops we’re seeing.”
But you don’t have to start scrambling – FinCen has extended the filing deadline to March 21st (for most businesses). Not a huge amount of time, but enough to get everything in order if you jump on it now. Or, if you’ve been taking my advice through this BOI reporting mayhem, enough time to submit your already gathered and organized documents.
Note: If you have a later reporting deadline, say, because of natural disaster extensions, this new March deadline doesn’t apply to you. You’ll still file by your later date.
FinCen promises to provide additional updates as the deadline approaches, and I promise to keep YOU posted with the breakdown of those updates. It is imperative for the sake of your Mount Vernon business that you keep an eye out for changes. I wouldn’t be at all surprised if FinCen wanted some more flip-flops for their Caribbean getaway.
And if you’re confused about this, please don’t hesitate to reach out to us. Getting caught up in a tangle because you didn’t make the deadline would not only be stressful for you, but it would be a significant setback to your business’s profitability. Unawareness comes at a high price.
And it’s amazing — and scary — how many businesses operate unaware of their financials, and end up paying for it… dearly. What I mean is, they’re operating without a true budget. Cash flow becomes their only barometer, and that often doesn’t include an accurate picture of ongoing growth or the health of a business.
And while creating a budget is often associated with personal financial management, for businesses looking to experience year-after-year growth, creating and implementing a monthly budget will help immensely.
This week, I want to discuss a few dos and don’ts of business budgeting to help you in the process. But make sure you aren’t doing this alone. One of the most important aspects to budget success is accountability.
That’s what we can help you with. Starting now…
Lynn Karam’s Business Budgeting Do’s and Don’ts
“It is not necessary to do extraordinary things to get extraordinary results.” – Warren Buffet
No matter how much experience you have with business budgeting, my first (and probably best) piece of advice to you is this: Start now. Start right where you are. Don’t waste any more time making less-than-optimal financial decisions.
Of course, growth of any kind in your Westchester County business never happens without encountering some friction. I’m not promising that starting to use (or refining your use of) a budget will be seamless.
But the gift of a budget is that it gives you confidence that, slowly but surely, you’re heading in the right direction (notice that I said “gift”, not restriction. Because trajectory in your business truly is a valuable asset).
1. DO have recurring budgeting meetings.
Your budgeting team should schedule a recurring meeting at the beginning or end of each month to discuss what’s going well, what needs to change, etc. Once you’ve made the commitment to budgeting, this is the first thing you need to establish – a time and a place to strategize and make adjustments that align you better with your goals.
2. DON’T let the numbers get lost.
I see it happen all the time with my clients – they want to budget strategically, but they don’t have the records on hand to lay the groundwork for a successful budget. They don’t see the importance of meticulous record keeping (and don’t have the capacity to do it), and their budget ends up suffering for it.
So, once your meetings are set, and you’ve created a budget document (Excel, Sheets, Quickbooks, Xero, etc.), focus on recording two main items: Income and fixed costs. Those two items are crucial to surviving and thriving as a business.
3. DO expect variables to … vary.
You need to account for irregularities – variables in income and expenses you can’t rely on but you can predict.
For every business owner, no matter what industry you’re in, this starts with creating a contingency fund. Also, it’s a solid rule of thumb to budget with higher-leaning estimates to help account for unexpected expenses.
Then, make a list of what variables in income and expenses there are for your business. List the ones you know, like inventory, utilities, or equipment maintenance, for example, then list the ones you can’t foresee as well: Things like supply chain disruptions, client payment delays, or inflation.
4. DON’T set goals on an island.
Set realistic, measurable goals for your business and involve your team in the process. This will give your business development team tangible numbers to chase, rather than vague, back-of-mind objectives.
Want to hire a new employee in the second quarter? Great, write that expense down. Want to take your team on an end-of-year retreat? Write it down. When is your peak season, and how much more do you think you can make this year than last?
All of these things inform how you shape your budget. Processing with your team will help them to be more committed to your business budgeting because they’ll want to see these goals become realities.
4. DO designate a scribe.
If you thought I was only going to mention your budget document once, think again.
It is crucial, as part of business budgeting, to have a place where you or someone on your team records each expense, variable, and income source (let such items fill your Y-axis, while each month headlines your X-axis). Here’s a few to get started:
Income
- Product/Service Sales
- Loans
- Savings
- Other
Expenses
- Rent/Mortgage & Utilities
- Salaries
- Bank Fees
- Web Hosting
- Insurance
Variables
- Contractors
- Advertising
- Transportation/Travel
- Office Supplies/Furniture
Those should get you started, but only you will know all the items to include. After you add up your income and subtract your expenses, you’ll have an idea of where your business sits. It can be as sobering as it is enlightening.
Don’t hesitate to reach out for help here – whether you’ve never used a business budget before or you’ve been doing this for years, it’s a daunting process with a lot of variables. But you don’t have to figure it out alone. Let’s chat about what an optimized budget could look like for YOUR business:
calendly.com/l-karam/prospect-schedule
Helping you budget better,
Lynn Karam