#19: QUARTERLY FOCUS IN YOUR BUSINESS

In today's episode, I’m discussing quarterly focus for your business. I’ll talk about what every business owner needs to focus on each quarter—like taxes, payroll, and goal setting. I'll walk you through the nitty-gritty of estimated and payroll taxes, highlight key tax deadlines, and discuss the importance of quarterly goal-setting and evaluation for sustained business growth. Grab your calendar and get ready to plan each business "season" for maximum impact!

Mentioned Resources:

• Free Estimated Tax Guide
• Get my Estimated Tax Tracker

   Previous Episodes: 

• #11: UNDERSTAND YOUR PROFIT & LOSS LIKE A BOSS 
• #12: UNDERSTAND THE MEAT OF YOUR BALANCE SHEET
• #15: HOW TO STAY ON TRACK WITH ESTIMATED TAX

 Email us with any questions you’d like answered in future Q&A episodes: 
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Recommended payroll software (affiliate link):
 ADP
GUSTO 

Recommended bank and the one I use in my business (affiliate link):
 RELAY BANK

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My favorite budgeting app w/ an amazing free version:
 EVERY DOLLAR BUDGETING APP

My preferred business credit card with cash rewards (affiliate link):
 If you have healthy behaviors around spending with a credit card, this is a great one to use and earn cash back. It also links up well with QuickBooks Online. If you have unhealthy spending habits with credit cards, please avoid using one! You need to be able to pay it off monthly and not carry a balance. I use this one for my business and it makes paying bills simple.
 CAPITAL ONE BUSINESS CREDIT CARD

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Disclaimer: This content is for educational and informational purposes only. Please consult with an accounting professional for direct advice based on your specific business situation.

Transcript

What's up my entrepreneurial friend? I'm Leslie Roth, your hostess and I'm happy to have you tuning in with me today.

Depending on where you live you might or might not experience the changing of the seasons as it pertains to weather. I'm in Pennsylvania and we get all four seasons. And I like certain things about all the seasons, but my favorites are spring and fall. It's about to transition into fall and I get really excited for the crisp air and the leaves changing and, of course, all things pumpkin.

Those die-hard summer people are probably cursing me right now and telling me to shove my pumpkin latte where the sun don't shine. But I'm sorry I am who I am. I'm not totally crazy about everything pumpkin but I do like to get me some pumpkin stuff every fall. I also love fall because I'm a mountain biker and I get really excited to be out on my bike when it’s cool.  I can't tolerate doing it in hot humid weather like in the summer so I get very excited this time of year for having those lower temperatures. And I'm also obsessed with being in the woods when the leaves are different colors. It's just truly magical. So, if you haven't visited the Northeast in the fall, do that immediately.

Anyways, you're probably wondering why the heck I'm talking about seasons changing and it's not just mundane small talk about the weather, I promise. It's because the idea of seasons ties into our episode today about quarterly focus in your business. Just like we have the four seasons of weather, business quarters are kind of equivalent to different seasons. If you're new to the world of entrepreneurship, you'll notice that everyone talks about quarters - quarterly this quarterly that. Depending on your business and your industry, different quarters could mean different things and look differently for you.

Even though each business varies in some way, there’s stuff every business owner needs to pay attention to each quarter, like estimated taxes and payroll filings. In this episode, we are going to talk about different quarterly focuses. That include this type of thing as well as goal setting and evaluation of your business by quarters and how it can help you.

First, we're going to get the boring stuff out of the way and talk about taxes and payroll. Federal and state governments break down quarters in a weird way compared with a regular business quarter. I touched on this in my deep dive of estimated taxes. That was episode fifteen. I highly recommend you go back and listen to that if you haven't yet. I also provided a really helpful estimated tax guide that you can grab. It's just at financiallyadjusted.com/estimated tax guide. So, make sure you snag that So you have an easy reference for understanding estimated taxes. And I also have what was mentioned in the beginning of this episode and that is the estimated tax tracker if you want the done-for-you approach. But I break down what estimated taxes are and how to save and track based on real numbers in that episode. First, I'll go over real quick what the regular business quarters are and then what the tax quarters are. There are four quarters in a year. Quarter one is January through March. Quarter two is April through June. Quarter three is July through September and then Quarter four is October through December. These regular business quarters each have three months in them and in my opinion they're broken out pretty logically, and they're all even.

I can't say the same for the government quarters. Quarter one is the same which is January through March. And then estimated taxes are due April fifteenth. Quarter two is where things get a little weird and it's only comprised of two months which is April through May, and then the estimated taxes are due June fifteenth. So only two months are in quarter two and if you need help remembering what makes up quarter two, you can think quarter two is two months. Quarter three goes back to three months. So you can think quarter three, three months. And that's June through August. So, June July August quarter three and those estimated taxes due September fifteenth. Finally, quarter four is made up of four months which is September through December. So you can kind of use that same system to remember how many months are in quarter four. Quarter four- four months- September, October November and December. And then you're going to be paying those estimated taxes on January fifteenth of the following year.

I won't dive too deep into the estimated taxes because I did that in episode fifteen. But with each of these tax quarters the goal is to obtain your accurate profit so you can save and pay estimated is based on real numbers. You always want to consult with your tax professional about taxes according to your specific situation. I'm not a tax professional; however, I do help my clients with getting that accurate P&L so they can save for taxes, track taxes, and get organized using real numbers - real profit numbers- and have that information ready for their tax professional. So that's what I'm here to help you with when it comes to estimated taxes.

And next we are going to talk about payroll taxes. And that's another type of thing in a business that is referred to on a quarterly basis. Many business owners get stuck when it comes to understanding the difference between paying quarterly estimated taxes and paying quarterly tax payments and filing taxes quarterly for payroll. They get confused very often so definitely note the difference. They are two very different things.

Estimated taxes are personal income tax is you owe to the IRS and your state's Department of Revenue based on your net profit in your business.

Payroll taxes that you file and owe are for paying taxes that are associated with running payroll for employees and or yourself. If you're an S-corporation, you are required to pay yourself as a W2 employee. So, just a side note here, if you're not doing this talk to your tax professional immediately and get started doing that.

I highly recommend ADP as a payroll service provider if you're running payroll, or you need to start running it for yourself if you're at S-Corporation, and I always link that in my show notes, so you'll find an easy link to ADP. But I used them myself and I have many clients that use them, and they are great. I’ve been able to compare a lot of different payroll companies and there's some other good ones out there. I also recommend Gusto but ADP has just stood out to me as being the most reasonably priced alongside having amazing customer service and a user friendly platform. So, if you're not familiar with running payroll and all that kind of stuff, it's pretty user friendly and I highly recommend them.

When it comes to federal and state payroll taxes, you are paying and filing month but there are also quarterly payroll tax filings to reconcile for the quarter. Local taxes are paid and filed quarterly. But federal and state, you're likely going to pay that monthly. If you have a payroll service like ADP, this is going to be great because everything's going to be taken care of or it should be You have to be careful because I know some of the QuickBooks online payroll services, they don't cover filing for everything so you can really get kind of tricked there in a way. You just want to make sure you have a service that is covering all the payroll tax filings. And even if you do hire a service like ADP or Gusto, you need to still be aware quarterly of what's going through.

It's always a good idea to follow-up with whoever is filing to make sure that it's being taken care of as it should be. Make sure you're downloading and looking at your quarterly filings to get familiar with those and keep them for your records. Annually, there are also payroll filings due so you want to have that on your radar as well.

The payroll tax filings include payroll taxes that you owe as the company and also taxes that are withheld from employee checks that you're responsible for collecting and submitting. I recommend just having a service that does this for you and not trying to handle this on your own. Some people do but it can get a little dicey trying to remember all of the payroll tax filing due dates, gather all that information, and doing it correctly.

So, if you're doing it yourself, there's a lot more for error and a lot more that you have to remember on a quarterly basis, monthly basis, all of that. You'll make your life a lot easier if you just get a service that does this for you. Or, if you work with tax firm, they might be able to take care of that for you.

Another quarterly focus to consider when it comes to payroll is if you pay quarterly bonuses to employees. You might want to consider doing this on a quarterly basis. For example, if you're a chiropractor and you have an associate or another type of practitioner that works for you, you can pay them a quarterly bonus based on net profits or specifically on their performance for that quarter. This is something that you should be making clear to them in the beginning stages of hiring them. And then everybody's on the same page.

The last thing I want to discuss as it pertains to payroll and quarterly focus is sending 1099’s in January. 1099’s reflect what you paid to contractors and businesses that provided you services throughout the year.

Even though it's reflecting annual and not quarterly, it's something that is very important to focus on the first quarter of every year. 1099’s are due January 31st. It's something you want to stay on top of in that first quarter. In that first month of that first quarter.

You likely have a bookkeeper or tax professional that could help you with this but if you're really small and you don't have that many to send out, you could easily do it yourself. It's actually pretty simple. You can also just pay contractors through a payroll company like ADP and then they can take care of sending out the 1099’s. The most important thing to note is that you need to collect a W9 form from them as you hire them for work. You want to make sure you get this right up front so you have that information and you don't have to scramble in January trying to get that because you will need that to fill out your 1099.

And the only ones you don't have to send a 1099 to are S-corporations. So, if somebody's an LLC they can be taxing, or elect to be taxed as an S-corporation, you won't know that unless you get a W9 filled out from them. And you need that proof with their signature to show that you in fact did not need to send them a 1099.

I'm planning to do an episode all about 1099’s closer to the end of the year so don't worry if you're like “oh wait I need to know more about this”, I've got you. I'm going to do that episode to get you more informed closer to the time.

But it's good just to have it on your quarterly radar for quarter one of every year and note that you have to have that in at the end of January.

The last thing as it pertains to taxes is of course filing your annual taxes. There are different dates to focus on for different entity types. For instance, if you're an S-corporation, your due date is March fifteenth. And if you're sole-proprietor or an LLC, your due date is April fifteenth because it gets filed within your personal tax filing.

The S-Corp filing is a separate filing. And it's due earlier in March so that the info is available for your personal filing in April. You can do an extension with your tax professional, but I recommend not waiting too long if you do an extension. Try to get that completed as soon as possible. I think it's October you can extend to. It's better just to have all your tax stuff taken care of though and off your plate so that it's not hanging over your head throughout the year.

But know that the end of quarter one is going to be your focus for tax filing as an S-Corporation and the beginning of quarter two is your focus for filing if you're a sole prop or an LLC.

It's helpful to keep this in mind so you can get your bookkeeping and your documents in order in enough time for your tax professional. We don't want that feeling of scrambling at tax time trying to find all your documents trying to desperately get your bookkeeping in order. Put those on your calendar as reminders and months before the due date have a prompt to stay on top of gathering all of your documents and getting your bookkeeping tied up for the year. Google tasks is definitely my friend and I'd remember nothing if left to my own memory. I say this all the time but Google tasks really helps me with daily tasks, monthly, quarterly, pretty much any business task that could just easily slip my mind like due dates I have to put in there.

Now that we got all the boring stuff and admin quarterly stuff out of the way, we can talk about the more exciting stuff which is goal setting and evaluating your business. In the last episode, I talked about managing money when you have a variable income, During that podcast I discussed how every business is different as far as timing when money is flowing in and when certain bills are due. One of the best things you can do as a business owner is recognize patterns and variables as it pertains to your own business operations.

To understand the flow of your revenue, it's helpful to evaluate your P&L on a quarterly basis and compare quarters during each year and between years. I think of business quarters as almost like little seasons so to speak. Sometimes individual months have quirks about them. Like an extra payroll run, for instance, that makes your profit go much lower for that month or an annual or quarterly bill comes due in that certain month that also takes your profit lower. And when you look at your numbers and evaluate them on a quarterly basis, it washes out those quirks and gives you a better more realistic picture of what happened during a season versus a more small and specific time period.

I still highly recommend evaluating your numbers monthly; however, it's incredibly helpful to evaluate and create goals based on quarters. It's also helpful to look at an entire year broken out by quarters on your P&L. This will help you recognize any patterns of revenue and expenses for each quarter, which is helpful for proactive planning like budgeting and forecasting. And also for setting revenue and profit goals.

Based on your business and industry, could you run quarterly promotions to help you meet these goals? Is there a less busy quarter in your line of work where you could introduce a new product or service that you could promote more in these lower quarters of revenue?

It's helpful to think about how your business season or quarter and how it lines up with your clients season of life that they're in. For instance, if you are a health coach, quarter one is going to line up with the new year when everyone's getting healthy as a new year's resolution. Summer might be busy because everyone wants to look good in a bathing suit. 

And, in contrast, the fall might be really slow because people's kids are back to school which means chaotic life starts again with school and sports and teachers aren't off for the summer anymore. But it's helpful to proactively plan each quarter and look ahead to the slow season. Maybe you can run a specific promo for that time period to ramp up sales.

It's also incredibly helpful to set goals at the end of each year for the upcoming year. You might want to think about if you want to grow a certain amount in each quarter if you're in a big growth period or in general if you always want to stay in growth mode. If so, you should define how much. Goals can hold you accountable and can also be kind fun and keep your finger on the pulse of your growth as it's happening.

At the end of each quarter, you can compare prior quarters for that year and then that same quarter from year to year. 

I like to set net profit goals. Revenue growth goals can be good as well but at the end of the day it's more about how much you're growing your bottom line, which is the money you actually keep from your revenue that you're bringing in.

If you're an S-corporation and you're paying yourself from the business as a W2, that will show up as an expense on your P&L, so your net profit margin goal might not need to be as high as an LLC or a sole proprietor, who's way of paying them is drawing from the net profit.

Just a quick reminder on what net profit margin is, if you're wondering okay what is that. It's the percentage of your revenue that you keep after expenses. So, it's just your net profit divided into the revenue to reach a percentage. So, it's just showing you what percentage of my total revenue I brought in that I kept and that didn't go towards an expense.

I'm going give you an example of what net profit margin goals can look like and I'll use chiropractors since they're my niche in my bookkeeping business.

Many chiropractors are S-Corps and I usually recommend shooting for profit margin of 20% and above at the least. 30-40% is also amazing as a goal if you can get there. Having a healthy net profit margin just gives you exactly that - margin. Margin to pay off debt, save money, pay yourself, and whatever else you want to do in your business. Above all, it means growth can happen.

Based on the costs that most chiropractors incur in operating their clinics, these goals can be very realistic. If you're a sole proprietor or an LLC, I recommend more a goal of 40% or above. Since you're paying yourself out of that net profit in the form of draws, you want more margin there because you have to do more with that profit.

If you're feeling fuzzy on understanding your financial statements and need that deeper explanation, check out the podcast episode that I did on a profit and loss statement and balance sheet. It's going to be episodes 11 and 12. And I'll make sure I link those in the show notes as well.

For anyone who's creating goals and evaluating your business, I feel like a quarter is just a really perfect span of time to implement change and see change. It's three months, which is a pretty sufficient amount of time for that change to happen. Like if you're trying a new quarterly promo and you implement that in January, after quarter one is over you've had three months where you can see if real growth happened in your revenue because of that promo. And you give it enough of a chance. You can compare quarter one of the current year with the prior year when you didn't run that promo and see the differences. This type of thing can be really fun and give you really great insight, especially when you're trying something new.

It's not that you can't do the same thing within the time period of a month but having that three month span of time to implement something is more realistic. You can compare this to say a fitness goal. You can make real progress in a month but it's more realistic to set and measure a fitness goal within three months. To evaluate changes and give yourself time to see real progress. Like if you started lifting weights and you're consistent with it you'll see a more noticeable change After three months versus one month. And measure more clearly if you can maintain that consistency.

My hope is that this episode is sparking some ideas for you on how you can evaluate things in business on a quarterly basis. Maybe you're already mentally thinking of quarterly patterns that you've seen in the past in your business or a quarterly promo that you could try out and what these little business seasons could look like for you.

Making any goal work whether it's business or life in general means you have to be willing to pivot and change. We can't know what we need to change or pivot until we're evaluating how things are working. Assessing your goals quarterly can clue you in on where you need to make changes and perhaps implement something new. It's also really nice to know and recognize when something is working. So, if you see consistent growth patterns from quarter to quarter, you can feel good about that and know that you're doing something right to get to that growth.

I recommend setting reminders for your quarterly check-ins and your boring quarterly tax due dates on Google tasks like I mentioned earlier, or whatever task system you use. This can act as a prompt, and we all know how crazy life can get so this will be your friend, trust me.

Also, if you don't already have a bookkeeper or a tax professional who meets with you quarterly to review your financials and your goals, I recommend initiating that. Even if it's an entrepreneurial friend or spouse, have someone in your life who can help you do this and hold you accountable.

Like anything new you set out to do, it doesn't need to be perfect. Just start, and that imperfect action will bring you clarity.