3 Things Every Small Business Owner Should Check Before Year-End

Most business owners keep an eye on their balances—but sitting down with the actual data is the part that tends to get pushed further out. With the year winding down, now is a good time to take a closer look at your finances.

Here are three things worth checking out on your accounts before the year closes.

1. Is Your Bank Balance Telling You the Truth?

A business can be having a good year on paper while the account still feels tight. Usually, it's because the money is tied up somewhere else like unpaid invoices, inventory, or in a balance that is already committed.

"When I talk with contractors and other business owners, one of the biggest surprises is how different a healthy profit-and-loss statement can look from the cash actually available in their account. I've helped customers uncover money tied up in receivables, inventory, and upcoming obligations—and once we separated those dollars, they had a much clearer picture of what they could confidently spend."
— Roya Sobhani, Retail Market Leader, Georgia Banking Company

What To Do: Compare what you earned last quarter to what's in the account today, then examine the difference. You should be able to point to where every dollar went. If you can't, that's what to sort out before you commit to any other big purchases.

Running everything through one account makes this way harder than it needs to be. When operating money, tax money, and payroll all sit in the same balance; that number cannot tell you what is truly yours to spend. Learn more about this and other tips in our blog: 4 Hidden Financial Frictions That Slow Growing Businesses.

2. Is Your Cash Earning Anything While It Sits?

If you keep a cushion in the business, check what it is earning. Money in a plain checking account earns nothing while it waits. Over a year, that could be a large sum of money you simply didn't make.

What To Do: Look at your average balance over the last several months and ask how much of it you actually need available day to day. Anything above could be working harder for you.

"I recently worked with a business owner who had built a strong cash cushion but was keeping all of it in a non-interest-bearing operating account. By identifying what the business truly needed day to day, we were able to keep those funds accessible while helping the remaining balance work harder. It was a simple change that made a meaningful difference."
— Derricka Sterling, Retail Market Leader, Georgia Banking Company

Here are a few options GBC offers to help your money work better for you and your small business. Business interest checking accounts earn on the balance while keeping everything available. A money market account or a business CD are good accounts for money you know you will not need for a while. And if the honest answer is that there is no spare cash right now—that is worth knowing too.

3. Will the Next Tax Deadline Be a Scramble?

Estimated taxes come due four times a year, and for a lot of owners each one means shuffling money around the week before. It does not have to work that way.

What To Do: Settle on a percentage with your accountant, then move that money out of your operating account as revenue comes in rather than when the bill is due. A second account with an automatic transfer can handle most of it. The benefit is that the tax money stops looking like money you can spend sitting in your balance.

What A Simple Setup Looks Like

If any of those three turned something up, the fix is usually structure rather than discipline. Here are four things to keep in mind:

1. Have more than one account. Start with two: one for operating, one for taxes. Add a savings account when you're ready.

2. Use automatic transfers. Let money move where it needs to on it's own—without you having to remember.

3. Gain interest on idle cash. Keep what you need available and let the rest earn more for you.

4. Hold a yearly check-in. Schedule a time with a banker who knows your business and can tell you what's changed.

"The business owners I work with are rarely short on discipline—they're usually short on time. A few well-structured accounts and automatic transfers can remove a lot of the monthly guesswork. My goal is to help customers build a banking setup that works quietly in the background, so they can stay focused on running and growing their business."
— Jay Lawrence, Retail Market Leader, Georgia Banking Company

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