Business Tips

If profits are up and the projections look good for the next month or two, should you kick back and relax? Maybe not. No matter how positive other signs may be, if you’re not keeping a close eye on your company’s cash flow, things could go haywire.

Even a temporary crunch resulting in late debt payments could cause your credit rating to fall and your cost of borrowing to rise. If you miss a loan payment or two, the lender might even call the loan. Here are some suggestions to help you maintain a healthy cash flow.

Develop a Cash Flow Budget

Projecting inflows and outflows on a month-to-month or week-to-week basis provides a critical snapshot of your business’s cash position and shows whether you’ll have enough cash on hand to meet your needs.

Improve Delivery

This may seem like a no-brainer, but if it’s been awhile since you evaluated operational procedures, it might be time to take another look. The more errors you can avoid, the better. New technology may offer some new ways to improve efficiency and lower costs.

Tighten Up on Credit

Wait to see how reliably new customers pay before extending credit. Then get credit reports and bank references, especially if the amounts involved will be significant. If you have late-paying customers, call to remind them their accounts are overdue. (You know what they say about squeaky wheels.) Switch perennial late payers to COD.

Beef Up Billing

Send bills as promptly as possible — the sooner they’re in the mail, the sooner your billing cycle starts. Crunch some numbers to see whether it makes sense to offer early-pay discounts. Make sure your payment terms include a penalty charge for past-due amounts.

Settle Disputes

Resolve shipping and billing errors as quickly as possible so customers don’t delay payment, which could put the squeeze on your cash flow.

There’s another way a cash crunch could take a toll: Without cash on hand, you might have to pass up opportunities to grow your business.

Whether you need individual or business tax advice, turn to Haque CPA, a New York City, NY CPA. We’ve got the answers you’re looking for, so don’t wait. Call us today at 212-880-2617 or request a consultation online.

You probably know of several businesses whose formal names end with the acronym LLC. And you probably also know that LLC stands for limited liability company. Here are ten things you may not know.

1. An LLC generally protects its owners from personal liability for business obligations in much the same way a corporation does, but an LLC is not a corporate entity.*
2. Like a corporation, an LLC can do business in multiple states, although an LLC must be organized in a specific state.
3. The owners of an LLC are called “members.” There is no limit on the number of members an LLC can have, and members don’t necessarily have to be individuals. Members’ management roles are typically spelled out in an operating agreement.
4. Upon formation of an LLC, the members contribute cash, property, or services to the LLC in exchange for LLC shares or units.
5. An LLC may borrow money in its own name and is responsible for repayment of the debt.
6. An LLC is usually treated as a partnership for federal income-tax purposes. (The remaining four points assume partnership treatment.)
7. Like partners, LLC members are not considered employees of the company. However, an LLC can have non-member employees.
8. LLC members are taxed directly on company income. The LLC itself doesn’t pay federal income taxes.
9. If an LLC has a loss, its members generally can deduct their share of the loss on their own tax returns.
10. For tax purposes, an LLC’s income and losses are divided among its members according to the terms of their agreement. Tax allocations must correspond to economic allocations of profit and loss.

An LLC is but one structure you might consider using for a business venture. We can help you determine which type of arrangement will best meet your objectives.

Whether you need individual or business tax advice, give us a call at 212-880-2617. We’ve got the answers you’re looking for about new business advisory and incorporation. You can also request a free consultation online today.

* Each state has its own laws governing LLCs. Consult with an attorney before establishing an LLC.

Are you interested in starting a new business? Make sure you do plenty of research and have a firm business plan ready before you take the plunge.

Making the Transition

If you have signed a noncompete or confidentiality agreement with your current employer, review it carefully to make sure it won’t hamper your startup efforts. If your new venture is in the same industry, be careful not to burn any bridges when you leave your current job. Scout out your opportunities. Buying a franchise or an existing business is much different than building a new business from the ground up.

Growing Your Business

Where will your customers come from? You may have one or two great prospects, but that may not be enough. Can you count on referrals from current business associates? Take a good hard look at opportunities for expansion that exist.

Figure Out Financing

Even with great prospects, it may take some time until cash starts coming in on a regular basis. Do you have enough of a financial cushion to get you through? If your spouse has an outside job, your spouse’s earnings and benefits may help provide stability during the startup period. If you need funding, where will it come from? Have you considered looking for a partner or investor?

Getting the Word Out

How much marketing and advertising will be required? Put together a comprehensive plan along with cost estimates. And, unless you’re familiar with the less traditional marketing and communication opportunities that today’s new media offer, you may want to enlist the help of someone who is.

Make a Budget

List every expense you can think of: rent, payroll (if any), phone and Internet service, computer equipment, website design, insurance, transportation costs, self-employment tax, etc. Then draw up a budget. Once your venture is up and running, you can use the budget as a guide in managing your finances.

Determine which entity is right for you

There’s a long list of decisions to be made early on in starting your business, but one of the most important is selecting the right business structure. The type of business entity you select can impact everything from how to establish owner compensation to how much you’ll pay in taxes. Learn more about our New York City incorporation services.

Call us today at 212-880-2617 for more tips on how to ensure you’re following business best practices, and let us help you keep your company in the black. Or, request a free consultation online right now!