It’s Financial Wellness Month – Are Your Finances Healthy?
January is Financial Wellness Month, and with tax season just around the corner, now’s a good time to get a financial check-up. Sometimes, the symptoms of tax, payroll, or other financial problems aren’t evident until your finances are in serious trouble, but doing the following every January can help you avoid some of the problems that affect business owners:
Check your personal credit reports.
Contact the three major credit bureaus – TransUnion, Experian, and Equifax – to obtain free copies of your personal credit reports. Often, the way people discover they’ve been the victim of identity theft is they notice unauthorized loans or open accounts on their credit report.
Check your business credit score.
You’ll have to pay to see your business credit score. Dun & Bradstreet, Equifax, and Experian all charge different fees for that, and they use different algorithms to assign your score. Equifax also includes a business failure score, which is the likelihood your business will fail, based on outstanding debts, delinquent accounts, charge-offs, and length of time since the opening of your oldest financial account.
Take a look at your payroll.
If you handle your own payroll processing, make sure you’re up-to-date on any relevant law changes. Payroll taxes and withholding requirements may change from year to year. If you have an accountant (which is a good idea, especially when you have employees), he or she can track regulatory changes and make adjustments as needed.
Review your investment portfolio.
Review your investments to ensure they’re still performing the way you want them to. If you’re not seeing the returns you want, or if you’ve decided you want to retire earlier than originally planned, you may need to diversify your investments, or rebalance them.
Examine your expenses.
Review your expenses for the previous year, so you can look for opportunities to save money. For example, if the utility costs for your building are high, you could look into making some energy-efficient upgrades (which might be tax-deductible). Your expenses also include payroll, if you have employees. If you notice all of your employees are logging considerable overtime, you might decide it’s time to hire an additional person.
Set goals for the coming year or two, so you can determine what financial milestones you must achieve beforehand. If your goals include remodeling, expansion, or adding new services, you can create a plan for funding those efforts.
Conduct a risk assessment.
The greatest threats to your business may change over time. Years ago, large-scale data breaches occurred only if businesses tossed confidential papers in the trash, but today, data vulnerability is a big concern for businesses.
A complete risk assessment should look at the security of your technology, along with factors such as:
- Market competition
- Market and economic trends
- Emergency preparedness
- Succession planning
- Insurance policies and liability
- Staffing needs.
You may need to hire an outside consultant to perform some aspects of your risk assessment. Your accountant and attorney can also help you anticipate – and protect your business from – threats.
Lusk Law, LLC, specializes in assisting business owners, helping them avoid litigation when possible, and representing our clients in court when litigation is necessary. Our experienced attorneys have provided legal counsel and representation to entrepreneurs in Frederick County, Howard County, Baltimore County, Baltimore City, Carroll County, Washington County, and Anne Arundel County, and other counties in Maryland. Please call us at 443-535-9715 or fill out our contact form if you need legal advice for your business.
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