Nothing is dependable like the economy’s undependability. But that doesn’t mean that you have to go into an uncertain economic time feeling stressed or unprepared. The economy will ebb and flow, but having an appropriate budget will help you prepare for any potential setbacks, prioritize essentials, and wisely manage your finances.

The best way to handle the uncertainty is by hiring a CFO, or a chief financial officer, who can help you allocate your funds and handle your financial resources. Here are ways in which a CFO will help or recommend that your business strategically budget, even when the economy is shifting.

1. Assess Finances

The first step that a CFO will do is assess your financial situation. This includes looking over your current spending, debt, cash flow, and profit margins. Hiring an honest and trustworthy CFO will give you peace of mind when you know that they will give truthful and helpful advice to keep your business moving forward successfully, even during uncertain economic times.

2. Identify Essentials

Once a CFO has a full picture of what your finances look like, they will work with you to identify what the essentials are in your spending. CFOs will help you find ways to cut costs in any area that is not necessary: needlessly large office space, excessive office supplies and equipment, ineffective marketing costs, poor employee to work ratio, etc. Though you might initially feel the shift from cutting some of these, it will be best for your company to allocate money where it is truly essential to prepare for any economic changes.

3. Cost Optimization

Though cutting unnecessary expenses is a great way to have some extra money dure uncertain economic times, your budget can greatly benefit from cost optimization. This is the process by which you find avenues to still get the services or products that you need in a more cost-effective way. A CFO can communicate with banks, investors, contractors, and lenders to negotiate a lower cost for some services or payments. They can also help you find less expensive software, negotiate debt, and communicate with any other stakeholders to maintain the quality of your business.

4. Strengthen Cash Reserve

One of the wisest things you can do financially during uncertain economic times is to set aside enough money for an emergency fund, or cash reserve. This ensures that even if something happens that cuts or hinders your revenue, you are still able to survive as a company. You don’t want the economy to wipe you clean from any financial progress you’ve made or put you at risk of going out of business. A CFO can help you make sure that you have enough money put away for 3-6 months’ worth.

5. Risk Management

Because of a CFO’s experience and knowledge, they will be able to understand trends and run financial models under best, moderate, and worst economic scenarios. They can then help you plan and budget accordingly and prepare for the worst case. This gives you an idea of how to move forward and prepare, despite uncertain economic times.

6. Diversifying Revenue

Diversifying revenue may be a great strategy for your business. It’s the idea of “don’t put all your eggs in one basket” – a CFO helps you get set up to bring in income in different ways. They may recommend ways to expand your market through new revenues than what you currently have, or suggest alternative services and products you can market. They may also help with adjusting pricing costs to bring in extra money or help transition to technology that reduces costs.

7. Optimizing Workforce Strategies

A business can make hiring mistakes that can cost more than they have budgeted for or lead to a money trap. If there are too many employees, people hired on for unnecessary positions, or excessive resources dedicated to training or hiring, then funds will be spread thinner. This can lead to workers being less motivated if money is being cut from their wages and the business will suffer, especially during uncertain economic times. Instead, a CFO will help your employee budget work for you; they will implement hiring freezes, performance-based compensation, and cross training. All of these will be helpful ways to balance work efficiency and budgeted finances.

Let Us Help

At Golub, Senitt, Rosenberg, & Co. (GSR), we have over 20 years of experience working with businesses to help them through any financial problems, including uncertain economic times. Our fractional CFO services provide the best in a variety of services. We want you and your business to succeed. Reach out today.

If you own a small business, handling taxes can be overwhelming, especially when you see so much of your hard-earned money seemingly disappearing. However, there are a number of ways to help your business make the most of deductions, credits, and business structure while remaining in compliance with the IRS. Here are a few tips in order to plan for a stress-free tax season.

1. Business Structure

Depending on how your small business is set up, its structure can allow you to benefit from different tax breaks.

• Single-Member LLC: Having the sole proprietorship LLC, or limited liability company, means that the business is solely being run by an individual. This ensures that you are not held responsible for anything that is not owner-specific liabilities. Though you are subject to self-employment taxes, this can help with taxes.
• Multi-Member LLC: Functioning similar to the single-member LLC, when your business is being held by more than one member, all parties are able to report the income as personal, rather than paying taxes at company-level.
• S-Corporation: S-Corp reduces self-employment taxes, which helps owners to take a salary and other profits as distributions, ensuring a lower tax rate.
• C-Corporation: Since there are significantly more owners and shareholders in a C-Corp business, this can be beneficial for businesses that are planning to reinvest profits. Though they may be double-taxed, the corporate tax rates might be lower.

It’s a good idea to look into the specifics for the type of structure that your business holds and talk with a professional to know what is best for your business.

2. Tax Deductions

There are a number of business write-offs that you can deduct, which can help minimize your total taxed income. Knowing some of your options can help you take advantage of them.

• Home Office: If you work from home, you can actually dedicate a percentage of your rent/mortgage and utilities to being a business write-off. In the instance that you have a room that is specifically used for a home office, you can use the percentage of what it’s costing you monthly as business expenses.
• Marketing and Supplies: Anything that you’re using to further your small business, from ad marketing and web development, to computers and office equipment, can be tax-deductible. Keep track of the amount that you’re spending on all the expenses to have on-hand during tax season.
• Vehicle Expenses: If you use your personal vehicle for your business, any costs that go toward the car’s gas, mileage, and maintenance can be deductible.
• Employees and Training: For all of the costs going toward your employees – such as training, conferences, education, certifications, wages, or health insurance – are all business write-offs.

As you continue to make purchases for investment in your business, know that business-related expenses lead to deductions and therefore tax breaks.

3. Tax Credits

On top of tax deductibles, you should look into what tax credits you qualify for. You may want to consider investing in some of the following to help your small business during future tax seasons.

• Energy Efficiency: Using environmentally friendly resources for your business, such as solar panels or EVs, may make you eligible for energy-efficient tax credits.
• R&D Credits: If your business is working toward specific development or innovations in products or services, this could help you benefit from the innovation-focused tax credits known as R&D, or research and development. A few notable examples of industry development are aerospace, winery, agricultural, automotive, and software development.
• Health Care: If your small business is providing health insurance to your employees, you may be able to get 50% off premium costs during tax season.
• Work Opportunity Tax Credit: The WOTC can qualify you for a tax credit if you have hired ex-felons, veterans, or individuals from disadvantaged backgrounds.

Aiming for tax credits is a smart investment for your business and can help with your future tax seasons.

Next Steps

CFOs, or chief financial officers, are there to help you identify how your business can benefit during tax season. They have financial expertise that is personalized in order to fit your business’ needs and help it thrive. Golub, Senitt, Rosenberg & Co. has a team of experienced fractional CFOs that are there to give you the best support during this tax season. Reach out today to get help for your small business.