#30: 6 FINANCIAL SYSTEMS TO EVALUATE BEFORE THE END OF THE YEAR

In this episode, I discuss the six key financial systems every chiropractic entrepreneur should evaluate as we approach the end of the year. It's all about reducing overwhelm, making proactive decisions, and setting up your practice for success in the new year.

Recourses Mentioned:

• Podcast Episode 15: How to Stay On Track With Estimated Tax

Helpful Resources:

• Free Estimated Tax Guide
• Get my Estimated Tax Tracker

Email me with any questions you’d like answered in future Q&A episodes!

Recommended payroll software (affiliate links):
ADP
GUSTO

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

QuickBooks Online is my go-to accounting software. Get an amazing discount (30% off for 6 months) when you buy with my affiliate link below.
SIGN UP FOR QUICKBOOKS ONLINE

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 friends! I hope you are doing great and had an amazing Thanksgiving last week with family and friends, if you celebrate. I've always loved Thanksgiving so much I love the of just enjoying good food with family and friends and as someone who used to be in the medical field doing all ultrasound. I worked so many holidays and I just really appreciate having off for them now. I want to thank any first responders and health professionals…who did have to work Thank you so much for your service. It's not an easy thing to have to work those holiday shifts and miss out on family and friend’s time. You are amazing. So just know that. 

So, now it is December which is totally insane to me. Mentally I am just still stuck in September, and I can't wrap my brain around the fact that we're approaching the end of the year.

As you notice with the title of this podcast, I'm starting to talk about the end of the year stuff because it's going to be here in a hot minute. And I don't know about you but ever since I became a business owner the end of the year and beginning of the next year just feel a little bit more stressful as far as planning and thinking ahead. When I had a W2 job the holidays and end of the year didn't feel quite so overwhelming with planning the end of the year and beginning of the year and looking at each quarter. I mean I really didn't have to do that. When you're running a business there is definitely an added layer of pressure around this time. It becomes all about goal setting and thinking about the year ahead and at the same time you're evaluating all the things about the year that you're finishing up currently.

For all of you chiropractic entrepreneurs, there's a very good chance that you're the one generating all the revenue or at least most of it by providing your services, unless you have an associate doc that backs you up and works with you. And that can really add a layer of stress if you're the only one providing the chiropractic services in your business because you're torn between wanting to take the time off for the holidays to spend a little extra time with family but then you have to think about how that affects your revenue.

I get it. And my hope and prayer for you is that you can allot a decent amount of time for rest and for quality time with family this holiday season and strike a healthy balance while still bringing in cash flow that you need to run your business and meet your needs.

It can really feel like a balancing act sometimes. My goal with today's episode is to help guide you through some of the end of the year tasks that can cause that overwhelm and help you get clear on some decisions you need to make and actions you need to take as we move into this new year.

Today I'm going to bring to light the most important financial aspects of your business to look at now and consider whether or not they're working well for you and if you need to change them up. This is the best time of year to do this, and it'll be much less stressful if you can start implementing any changes now, and get the ball rolling on these.

So, the first system that we're going to talk about evaluating is your bookkeeping system. So, with your bookkeeping system you're going to ask yourself is your bookkeeping currently being done on a monthly basis and are you getting monthly numbers that are helping you run your business. Are you getting a monthly profit and loss statement and balance sheet that you can evaluate knowing that they are accurate numbers? And, if you have an accounting system, can you easily navigate your accounting software.

Whether you're outsourcing or DIYing your bookkeeping, you should be able to log in to your system and easily navigate to find reports. So, having your bookkeeper help you is one option. You can reach out to them and just see if you can schedule a meeting to go over any of the reports that they've done so far for you this year and maybe just show you how to navigate the bookkeeping system.

Now, I will say if you have like a QuickBooks desktop, this can be a little bit harder to be on the same page at all times with an outsourced bookkeeper or accountant because a lot of times it's not updating in real time. So, their version may be different from the version that you're seeing. 

But if you have an accounting software that's cloud based, that means that it's online and it's updating in real time. So, if somebody's going in there and making changes and you log in, you're able to see all of the updates in real time.

So, I do highly recommend getting one that's cloud based. You want to also

think about whether or not you are keeping system is scaling for you. So if you are a smaller business and you are just putting all of your numbers into a spreadsheet, and that's how you're operating. If that's worked for you, Great but I do want to bring some things to light for you to consider. As you're growing your business it's going to be a lot harder to maintain a system like that. And it's also going to be a lot harder to compare from year to year? And evaluate your revenue and the the growth changes from year to year from month to month It's just going to be a little bit more clunky and disjointed so I want you to seriously consider at the end of this year switching to an online cloud based accounting software.

I think that it's going to make your life so much easier in going to allow you to stay up to date on your books and pull the reports that you need when you need them and really use all that data that's at hand for you in the future and with being able to look back like that. You can use that data to plan future years and just help you see the big picture of how you're growing. It just makes it so much easier. And if you do plan to outsource in the future, having that software is going to be amazing because you can add your accountant or your bookkeeper to that software and they can see it on their end from their dashboard. Also, everybody can be on the same page and makes it really easy to manage your finances. So definitely consider switching at the beginning of the year for your bookkeeping software if you haven't done that yet.

The second of the six systems that we're going to talk about is your budgeting system. So, if you're someone that you haven't…done any budgeting before you've maybe considered it, I think now is the time to really put that in motion. I always talk about budgeting because budgeting is the way I think you gain control in a proactive way, with your money. It gives you a plan for your money. I like to call it your map for your business - money allocation plan - because you're actually directing your funds to where you want them to go.

It's so great to have that bookkeeping system and you need that too where you're pulling up your reports every month looking at them being able to analyze but when you're doing that, that's past data. That's already happened. And you're not really able to change what's happened and where those funds have gone because it's in the past. But with a budgeting or money allocation plan, you can look ahead and I recommend doing know six months to a year ahead if you can. But you're taking all of that projected revenue and giving it a purpose and being proactive about it. And that puts you in control.

Now as far as the tools to create your budget and the system you're going to use: You need to consider what would help you to stay in it and to check-in more frequently and be consistent with it. So, is that an app for your phone? Is it a spreadsheet? If your a chiropractic entrepreneur and you're busy seeing patients a lot of time and you don't have a lot of time sitting at your computer, then it may be best for you to have an app on your phone. So, I recommend every dollar app. It's free, you can get a paid version that will allow you to hook up your bank accounts. Since you're tracking all of your expenses in your bookkeeping, I don't think that it's absolutely necessary. I think this free version is out absolutely perfect for you to create a budget. And it's easy to use on your phone and on your browser so definitely check that out. But if you have not started budgeting yet that is something you absolutely start doing because it will help you take charge of your money and look ahead and know what you need to do with your money so that you can save for necessary expenses you can see how much margin you have to take home how much you have to leave in the business. And it just puts you in control more than any other thing you can do in your business.

So, if you already have a budget, ask yourself realistically how often you're checking in and how well you're doing with staying up to date with your budget. So, if you're in a system like a spreadsheet or writing it down and you realize that's not really working for you, it's not allowing you check-in frequently with it, consider getting an app for your phone because if you're like me and everybody else you always have your phone near you, and you can access it easily. So that is definitely a helpful tool to have. 

And consider the proactive approach, especially if you're a chiropractic entrepreneur. I'm guessing that the behaviors you're encouraging all your patients to have around healthy and getting their chiropractic adjustments involves being proactive. You're always suggesting to them that they be proactive about their health by maintaining their chiropractic adjustments and going frequently.

So, any health results happen because of that proactive measure. We don't get mentally or physically healthy because it just happens to us and we're lucky. The same goes for your finances. You can't expect to have a healthy thriving practice if you're always in that reactive mode. You’re always just looking in the rearview mirror.

You want to make sure you're looking through the windshield of your finances you are being proactive and you know exactly what's coming ahead. And exactly how you're going to manage it.

Okay the third system to evaluate at the end of the year is going to be your bank accounts. How you do your banking. You want to ask yourself does your bank integrate with your accounting software. If you have that or if you're planning to get accounting software that's online. Does that bank integrate? And I do love local smaller credit unions and banks. However, you do need to consider the fact that they might not link in to or connect with your accounting software which can really be difficult to manage as easily or as efficiently so I recommend getting a bank account that will link up to QuickBooks online or Xero whatever accounting software you're going to use.

Ask yourself whether or not you have an easy quick time of logging into your bank when you're on the go does it have a good app for your phone? Do you get statements easily? Also, if you have multiple business bank accounts or you want to have multiple business bank accounts, does it allow for that?

I use Relay Financial in my own business I just switched, and I have absolutely loved it because I like to have different savings accounts for sinking funds for if I'm saving for something taxes for, emergencies, and then just having your separate operations checking account. It's nice to have a separate income checking account. If you want to have all these different checking accounts a lot of banks will only allow for you to have a few but Relay Financial is nice because you can have multiples. I think it's up to twenty. And then it also has really good bill pay features. So whatever bank you're going with you want to look at the bank accounts that allows you to have does it have bill pay features because a lot of times that is an easy way for you to manage your bills And get checks sent out you can just add your vendors that you need to pay in there and it's often a free service for banks.

Also, if in your business if you have say an office manager or an assistant that you allow them to have um debit cards so you want them to be able to purchase different office supplies or whatever else you need them to purchase in your business or maybe even just like the running out to get a meal for the staff, you can actually have with Relay Financial multiple debit card that you can assign permissions to for those different employees.

Other banks do that, but I recommend Relay Financial because They make it really easy and they don't charge like all these extra fees that some of the other banks do. Those are some things to consider with your banking and if you're going to switch banks that's always easier to do at the end of the year going into a new year. Ask yourself does it integrate with the software that I'm using for my bookkeeping. Is it easy to navigate and get statements? Do they allow for multiple business bank accounts and does it have the bill pay features or the debit cards that I can give to my employees and the permission setting.

So, if you want any of those features, think about that and, you know maybe think about switching I do have a link It's an affiliate link so full disclosure I get a little bit of commissions on those I'd be recommending it anyways because I love it. But check out that link in the show notes. If you're interested in Relay Financial, check that out or if you're already with a bank that you like just maybe ask them about these other features if you're not using them already and maybe they do have some hidden features that you're not aware of.

Alright, number four, tracking your estimated taxes. So, this is a system you may or may not have really thought about before, and maybe you just get the estimated totals from your CPA or your tax professional every year and you send in what you need to be compliant. But tracking estimated taxes throughout out the year and estimating how much you would owe based on your real time net profit is incredibly important. If you're a growing business, you may have a lot more in net profit than was estimated at the beginning of the year. If you're really growing, you need to make sure that you're setting aside the money that you'll need for the potential increase in taxes beyond what you and your tax professional spoke about at the beginning of the year. So, that may have not taken into consideration…the additional Revenue that you brought in and the additional profit that you have in your business that you'll pay taxes on. So, if you have a tax professional that is advising you and you're doing maybe a meeting or two throughout the year beyond just tax compliance at tax time, you want to talk to them about this and you want to touch base with them asking them throughout the year based on your real time net profit if there's a difference.

So, a lot of times I see business owners coming up with like a big tax bill at tax time because they haven't checked in throughout the year to see if they'll owe more money than what was initially projected. So if that's you and you often have that bigger bill at tax time that you're not prepared for you haven't saved for or didn't realize you were going to owe. Then this is very important, and I think it's important for every business owner to be staying on top of this so that you're not caught by surprise with that big bill. And having a system to track based on your net profit and the payments that you've already sent in is incredibly helpful and will help you do this. So, I recommend doing just a simple spreadsheet you can track maybe twenty-five thirty percent of your net profit to save or pay in if you choose to throughout the year So you can send in those payments that your CPA recommended for you to send in and then just save money on top of what you would owe. And twenty-five to thirty percent usually should cover your taxes.

If you take that twenty-five thirty percent of your net profit and plug that into the spreadsheet then that is going to give you an actual closer number to what you might owe in taxes. And of course, you must consider if you have other income within your family. If you have a spouse who has income, if you bring in income from somewhere else you must consider all of that. But I do have an episode on that I'll link that in the show notes and then I also have an estimated tax tracker that you can purchase that you'll be able to use that from year to year, and it's already done for you. You can just plug in your net profit into that.

Alright number five out of six of the systems that we're talking about today for evaluation is you are financial team. So, this isn't technically a system like the others that we mentioned but your financial team is truly a system, and all of your financial professionals that are working for you should be collaborating and working together for your benefit.

So, ask yourself first who are your financial professionals, have you hired a solid tax professional um an outsourced bookkeeper, and a financial advisor, or do you have maybe an office assistant that's helping you with bookkeeping. Anybody who's doing anything within your finances, you need to think about how that relationship is going and whether or not you're having them all collaborate and be on the same page.

Also when it comes to your tax professional, I want you to consider how often you're meeting with that person. Is this tax planning versus just tax compliance that they're helping you with. If you're just meeting with them once a year on your taxes, Whenever it's tax time and getting everything organized and touching base with them one time each year, you're just using them for tax compliance. Tax planning would be if you're meeting with them one to two times maybe more throughout the year depending on the complexity of your business to discuss tax strategies that can be done within that year.

So that's super important and I really think meeting with a tax professional for tax planning at least once throughout the year is really important no matter what level of business you're at because there could be tax strategies that you're not getting and you're going to completely miss out on those after December thirty first.

So, talk to your tax professional and see if you could start a meeting with them at least once throughout the year for that planning and just to touch base with where you're at maybe middle of the year. Because at tax season it can be really too late for a lot of tax strategies that you could be implementing. And you also want to touch base with them on the estimated taxes that I spoke about and see if they can help you navigate that a little bit and make sure you're not paying in too much money to the IRS. So, you definitely need that tax advice at least once throughout the year.

And sixth and last that we're going to talk about evaluating at the end of the year is payroll. So, your payroll system. It's very important that you are paying yourself and your employees the correct way, and that all of those taxes that need to be sent in and filed are being filed properly.

So, if you don't have a payroll company that you're working with or the one that you're working with you're not very happy with then now is a great time to consider switching. At the end of the year, it's actually the perfect time.

But you want to make sure you initiate that switch around this time, like around the beginning of December so that you have time to gather up all the documents that you need from your old processing company, and give it to the new one and get everything implemented prior to the start of the year, and it's much easier to do that with tax filings to just switch over fresh in a new year.

You want to also consider or are you sending 1099’s every year through your processing system so you would want to switch that as well.

I recommend ADP or Gusto because I think they have great customer service for the money that you're paying in comparison to other businesses.

Review your costs and your staffing needs as well. It's a great time to evaluate who you're paying in your business how much you're paying them, how that's working for you as far as a percentage of your revenue, how much that is. And I want you also to consider if you're paying yourself the correct way in your business based on your entity.

If you are an LLC, solo prop you’re simply going to be paying yourself via a draw.

So, you would just transfer money from your business checking account to your personal checking account. If you are an s-corporation you are paying yourself as a W2 employee through payroll, where all the payroll taxes are coming out like a regular W2 paycheck. And if you're not doing this and you're an s-corporation I want you to talk to your tax professional right away. Make sure you implement a plan to pay yourself a salary before the end of the year That is one of those IRS red flags. If you're an s-corporation they will definitely audit you quicker than someone else. So, make sure that you're in compliance if you're an s corporation and you're paying yourself the proper way.

Like I said though if you're a sole prop or an LLC you're just going to be paying yourself directly from your business checking account to your checking account as a draw. So that is a huge thing to consider before the end of the year.

And you also want to review your costs and your staffing needs. Are you overstaffed, understaffed? Look at what you're paying people. Can you increase their salary or their hourly pay. Start thinking about what that's going to look like on your P and L from here on out.

How much have your payroll cost been in the past? And how much do you project they will be in the future in comparison to your revenue? I like to do a P and L that shows percentages of what expenses are in comparison to revenue, and I usually recommend if you're an s-Corp staying below fifty percent of your revenue. And if you're an LLC, stay more below thirty percent of your revenue in payroll costs.

So, it's good to evaluate all of that at the end of the year and all these six systems are just so much easier to switch at the end of the year going into a new year than in the middle of the year, especially bookkeeping and payroll.

If you're looking to hire a new bookkeeper or hire one for the first time, now is a really great time to start getting in touch with people and meeting with people and seeing if they're a good fit. And getting started fresh in the new year don't want to be scrambling at tax time to find a bookkeeper to clean things up at the last minute. You want to make sure you're doing that as soon as possible so that you're ready at tax time and you're not stressing.

Also, if you're hiring a new tax professional, my best advice to you is do not wait until tax season. So many tax professionals, as we know, are very swamped at tax time and might not be able to take on new clients in the thick of the season.

So do your research now and reach out now so you don't put yourself in the situation or get desperate and end up working with someone that's just not the right fit. The same goes for a bookkeeper. You want to vet these professionals that are going to be working with you earlier than later so that you have time to get established with them.

That's all I have for you today. Try not to feel too overwhelmed by all of the end of the year things. Just take one decision at a time and prioritize the more timely things.

Be sure to tune into the podcast next week where I talk about properly paying bonuses to employees. That's likely something you're thinking about time of year, and I want to make sure that you are paying people properly. Many of you might be thinking about giving out those bonuses so be sure to tune in and get all the information on that.

And remember, as always, action brings clarity, and imperfect action is better than none at all.

Have a great day my friend!