While many people consider their financial plan at the beginning of the new year, it should be a consistent and regular part of your business practice. The last few years have come with unique challenges for many businesses. Many businesses without a financial plan were left behind due to the difficulties that ensued due to the pandemic. Avoid putting your financial plans on the back burner so your business can not only stay afloat, but thrive. Below you will find commonly overlooked financial plan considerations.
Commonly Overlooked Financial Plan Considerations
No matter what time of year it is, consider the following overlooked financial plan considerations.
Review Retirement Savings:
Americans are living longer, and it looks like life expectancy numbers will continue to increase. Having enough retirement funds is necessary to cover your living costs. In order to extend retirement account balances with the current life expectancy age, required minimum distributions have changed within the last year. Required minimum distributions allow individuals to take smaller distributions which results in less taxation. This results in more money being left alone to potentially grow into more long-term gains.
Review New Tax Law Changes:
The law is always changing, especially when it comes to taxation. Avoid missing opportunities that could result in gains and review new tax law changes. Taking the time to understand how the tax law changes apply to your business can save you a lot of money. Some considerations include increases to charitable giving deductions, advance Child Tax Credit payments, increases in retirement plan contributions, and increased income thresholds caused by inflation. If you are not well-versed in tax law, consider talking with a professional to ensure you maximize your benefits.
Review Your Workplace Benefits:
Risk management is an overlooked area when it comes to financial planning. This is especially true when it comes to your workplace benefits. The health of you and your family is the most important factor when it comes to long-term prosperity. Consider your health and the health of your family to determine if your health plan is right. Consider your health plan, life insurance options, and overall benefits package to ensure maximum protection for you and your family. It is important to leverage these benefits to protect you from unexpected hardships.
Elements of An Effective Financial Plan
Considering the overlooked components of a financial plan is important. In addition, having an effective financial plan that you regularly review is necessary. Consider the following elements of an effective financial plan.
- Financing Options: To grow and maintain your business, you need financing. If you already have the funds necessary to get your business running, this may not be necessary. However, finding funding is necessary. It is often achieved through debt, investments, or both.
- Financial Projections: Projections are necessary and should be based on realistic numbers when it comes to your business’s revenues, expenses, assets, and liabilities. Financial projections are beneficial as they can provide you with a rough picture of what is to come so you can effectively plan around it. Doing this on your own can take time, so consider online bookkeeping services so you can focus on the bigger picture.
- Budget and Monitoring System: Developing a budget for your financial projects can ensure you avoid overspending. Maintain a conservative budget until your projections become more accurate. In addition to a budget, create an effective monitoring system to keep track of your finances.
- Risk Management: Managing your risk can be achieved through an effective risk management assessment. This should be done regularly and be based on your unique business. Consider online bookkeeping services as they can provide an accounting snapshot for small businesses. This snapshot can allow you to see the details necessary to help you make day-to-day and big picture decisions more effectively.