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Existing Business

Proper management of business finances is essential to the long term livelihood of the business. It usually requires an in depth understanding of financial management and is carried out by having a suitable business plan, creating realistic projections, and using professional accountants or bookkeepers to properly account for all transactions.  Accurate bookkeeping for a business can provide valuable information which will help with routine tasks such as preparing Financial Statements but it will also allow the decision makers to gain a clear picture of the financial position of the business. Overall, it will help to improve business operations and maximize profits.  Understanding business finance basics will help you run your business properly, whether you are looking to start up a business or have an existing business. Financial statements provide information on how the business is operating and when produced monthly, they provide financial information for the improvement of business operations. Financial ratios are used to analyze the financial health of a business. A budget is the future financial plan of the business and allows operating plans to be converted into financial numbers in order to ensure that these plans are possible.

Think about the benefits that will be realized for your business when you work with a professional. Contact a qualified local financial planner today for assistance with your existing business.

Maintaining sufficient cash flow is crucial since inadequate cash management is one of the most common reasons why small businesses fail in the long run. The managers and financial decision makers must understand the basic concepts of cash flow in order to have effective cash management in a business.  A statement of cash flows is a financial statement that shows the changes in cash and divides the analysis into operating, investing, and financing activities. Cash refers to actual currency in the bank and does not include the value of inventory, accounts receivable or other such items that may be converted into cash. Subtracting expenses from income will show the profit that the company made, but not who much cash is available. That means even a business that is making a profit, can run into problems if the cash which is needed for day-to-day operations is not managed properly.

 To properly manage an existing business, it is useful to research the following topics:

  • Business Finances
  • Cash Management
  • Asset Management
  • Business Taxes
  • Payroll Taxes
  • Self-Employment Tax
Asset management is a method where items that have monetary value to a business or individual are monitored and maintained. It is a systematic process of operating, maintaining, and upgrading assets cost-effectively and may apply to both tangible assets and intangible assets such as intellectual property and goodwill.  It includes managing assets so that the greatest return is achieved and is usually measured in an ROA calculation.  ROA, Return on Assets, gives an idea as to how effective the business is when using assets to produce earnings. ROA is calculated by dividing earnings by total assets and is displayed as a percentage. It is an indicator of how profitable a company is when compared to its total assets.

All businesses must file an annual income tax return and the returns you must file depend on how the business is organized, meaning the business structure or the business entity established. The federal income tax must be paid as the business earns income throughout the year.  If the business is not required to make estimated tax payments, the tax due may be paid when the tax return is filed.  Self-employment tax is a social security and Medicare tax for individuals who work for themselves and counts towards future coverage in the social security system.  When a business has employees, there are specific employment tax responsibilities that must be paid.  Employment taxes include Social security and Medicare taxes, Federal income tax withholding, and Federal unemployment (FUTA) tax. Excise tax may be applicable if a business or individual manufactures or sells certain products, operates certain kinds of businesses, uses various kinds of equipment, facilities, or products, or receive payment for certain services.

Find out more information about how to maximize earnings for your existing business. Contact a local financial professional in your area.