How will my 2018 taxes affect my cash-on-hand reserves?
So, your CPA tells you that you owe thousands in taxes? Don’t panic; it’s very common for profitable businesses to owe a lot on Tax Day.
What’s most important is managing your cash flow, especially for large bills. And that takes proactive strategies. Now that you know what you’re going to owe for 2018, it’s time to figure out how you will pay it. First, there are a couple impending expenses to keep in mind.
Payroll taxes. You may have to tie out payroll taxes in December. Your CPA could suggest that you try and take out more of your taxes via payroll; you’ll need to set aside cash in order to make that happen.
Quarterly taxes. In January, you may still have your last quarterly estimate due for 2018, so you will need to plan for that cash as well.
Your final payment will be in April, when you file your tax return. My recommendation is do cash flow forecasting. That way, you will be able to see beyond the money that you already have in play for the next 90 days and predict what your cash flow requirements will be leading up to the final tax payment in April. If you’re forecasting your money from right now, you will be able to project those payments and devise ways to hold on to extra money to pay your taxes.
With my Total Cash Clarity Forecasting tool, you automatically receive an 8-month projection of what your cash requirements are and what you’re projected to make. When you plug your estimated tax liability into Total Cash Clarity, it will compute against your current operative budget to determine whether or not you’re going to run out of money before you’re able to make those tax payments. Sign up below for a 2-month FREE trial subscription!
Knowing your likelihood of being able to pay your full tax bill now gives you the ability to restructure your cash flow, or plan for additional credit lines and credit debt, if that’s what you must do. Having this plan also allows you to make strategic decisions that will give you a different outcome in January or February to help you accumulate some of that money to put back into your cash reserves.
It’s a good feeling when you know that your taxes are handled. It gives you a nice piece of mind heading into a new year with a plan for a clean slate.
Cash flow consultants, like me, take a deep dive into your books and strategize ways to limit liability, offset debt, increase profits and keep your cash flowing. Following a review of your financials, I provide you with the tools and education needed to feel totally empowered while making informed business decisions regarding your company’s cash flow.
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