Many business owners focus on growth in sales and profits, but an important gauge is cash flow

us-dollars-84594__180Cash flow needs change on a daily basis. The more you’re aware of cash flow needs, the more control you’ll have over your business.

  • Calculating cash flow. Cash flow from operations can be calculated by taking net profit, adding back depreciation and amortization (noncash outlays), subtracting increases in accounts receivable and inventories during the period, and adding increases in accounts payable. Calculations can be done on whatever operating cycle time frame is most meaningful to you (monthly, quarterly, etc.). Best results are usually obtained by using monthly cash flow statements and projections based on prior experience.
  • Using cash flow. Building a history of cash flow needs by using historical financial records will provide an invaluable tool for projecting the timing of receipts, expenditures, and financing needs. Periods of negative cash flow can seriously hinder expansion plans and may even lead to business failure. Cash flow statements and projections can forewarn you of cash needs and allow you to implement changes.
  • Improving cash flow. Proper management of accounts receivable and inventory can strengthen cash flow. Review billing procedures to reduce lag time between shipping and invoicing. Reexamine credit and collection policies. Consider offering discounts for early payment and charging interest on delinquent balances. Review inventory levels. Be alert for stockpiles and excess inventory. Dispose of obsolete inventory by reducing prices or selling for scrap.

Effective cash flow management will permit better utilization of cash, generate additional funds from internal sources, and provide advance notice of financing needs. Knowing your cash flow requirements is imperative for business success.


Do you have kids in college? Check the “support” test to maintain dependent deductions

IRS Announces 2016 HSA Limits

Do you own a boat or RV? It may qualify for tax deductions

Six items working parents should be aware of

reminder-791271_640Working parents should be aware that the child and dependent care tax credit is available to offset some of the expenses for child care.

  • Children must be under age 13 to qualify for the credit.
  • The credit applies whether the childcare provider is a sitter at home or a daycare facility.
  • The credit applies for up to $3,000 of expenses for one child and up to $6,000 for two or more.
  • The credit can be up to 35% of qualifying expenses, depending on your income.
  • Overnight camps don’t qualify; day camps do.
  • Keep receipts for expenses, and get the employee ID number of the care giver.

Create a road map to retirement

above-736879__180Preparing for your retirement is a journey. And like most journeys, success or failure often hinges on decisions made early in the trip. Consider some of these pointers as you develop your personal road map to retirement.

A solid retirement plan begins with an honest assessment of what your golden years will look like. Will they involve exotic travel, special purchases, or carefree living? Or do you plan to live modestly, perhaps working part time? A possible hint might be to consider how you are living right now. Many people assume that their living costs will decline later in life, but they often stay about the same or even increase.

Once you know how you want to live, it’s time to take stock of your assets. Are your investments where they should be, or do you have some catching up to do? Keep in mind that those 50 years and older can contribute an extra amount each year into their 401(k) or IRA to help get up to speed. And no matter what career stage you are in, be sure to take full advantage of the matching provision in your employer’s plan.

Like any excursion, your path to retirement will need an occasional tweaking to stay on course. As your working years draw to a close, consider shifting your asset allocation from higher risk securities to those with less price volatility and steadier cash flows. And along the way, take steps to keep your household budget in check. Think hard before incurring additional debt that might stymie your retirement plans. Analyze your spending to see what you really need to live on.

Finally, assemble a team of professionals to help chart your path. You might need to coordinate life and health insurance, estate plans, and tax issues to achieve your retirement goals. If you need assistance, give our office a call.

Don’t forget the June 15th filing date for U.S. citizens abroad

elephant-279901__180U.S. citizens and resident aliens living overseas or serving in the military outside the U.S. have a June 15, 2015, deadline for filing their 2014 income tax returns. Taxpayers using this automatic two-month extension for their 2014 filing must attach an explanation to their return that states whether they live overseas or serve in the military outside the country.