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Situation Analysis

Situation Analysis

For Your Midyear Business Review Don't Forget a Personal Financial Checkup

For Your Midyear Business Review Don't Forget a Personal Financial Checkup

The midpoint of the year is the last, best opportunity for business owners to take a step back, review their goals and strategies and make any necessary adjustments to ensure they can get on or stay on track to achieving their business goals. The problem is, most business owners are so consumed with working on their business, they don’t pay attention to their own personal financial situation. Many ignore the fact that the clock also is ticking on their own, personal ambitions, which could be getting further out of reach. Taking a day at midyear to conduct a personal financial checkup, can take some of the stress out of trying to grow a business.

Here are three simple steps business owners can take to ensure they are on track financially.

Review your goals

It’s not unusual for business owners to go years without reviewing their personal financial goals. They may be long term, so it’s easy to let them recede into the background. Now is the time to bring them to the forefront to see if you are on track to achieving them.

  • What are your most important financial goals?
  • Have they changed or have you reprioritized them?
  • Have you updated the costs to achieve them?
  • Where are you financially in relation to your goals? Are you on track?
  • Has anything come up, such as a new expense, that may affect your timeline?

Review your financials

Just as you should review the financials for your business at midyear, so should you review your personal financials, including your own financial statement and budget.

In your financial statement, look to see where you are with your assets and liabilities.

  • Has there been an improvement?
  • Are you where you expected to be halfway through the year?
  • Are you increasing your liabilities (i.e., new credit card debt)?
  • If you have had substantial gains in your investments, should you consider rebalancing your portfolio?
  • If you have incurred any losses, should you consider doing some tax loss harvesting to offset capital gains this year?
  • Does your investment portfolio still reflect your risk profile?
  • Have conditions in the market changed to the extent you might want to adjust your portfolio?

These are questions you should bring up with your financial advisor at your next meeting.

For your budget:

  • Are you on track with your spending plan?
  • Are there any new expenses that need to be incorporated in your plan?
  • Are you spending or saving more than expected?
  • How will that impact your cash flow for the rest of the year?
  • What adjustments can be made to help you meet your annual savings goal?
  • Can you find the savings to add to your retirement plan contributions?

Review your tax situation

After just having filed your taxes, you may not be anxious to spend any more time with them. However, it is the ideal opportunity to make sure you’re taking full advantage of the opportunities available to you and to ensure you’re on target with your estimated tax payments.

  • If you’re a sole proprietor, sub-S corporation, partnership, or LLC, how did the new QBI deduction impact your taxes last year?
  • Did it result in tax savings you could apply towards your business or personal investments?
  • Were you able to adjust your estimated taxes?
  • Do you expect your personal taxes to increase or decrease based on your projected yearend earnings?

Now would be a good time to meet with your accountant to identify opportunities to reduce taxes between now and the end of the year, while avoiding possible underpayment penalties.

The advantage of checking in with your personal finances at the midyear point is it can keep any necessary adjustments to a minimum. At the very least, it should allow you to clear your mind of any personal stress as you refocus your efforts on growing your business.



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