The end of the year tends to throw most practices into a whirlwind of chaos. Between mid-October and mid-January, it often feels like survival mode with managers and owners putting off any "non-crucial work” until after the holidays.

However, a bit of foresight and planning can alleviate some of the year-end burden. You know that inevitable tax bill is coming— it’s one of life’s certainties. Chances are your accountant will advise that you spend some money before year-end, and you will likely have some capital expenses to spend it on. So, prepare early to ease those November/December headaches and make the end of the year a bit smoother.

Strategizing for Taxes

Avoiding that hefty hit to your bank account come tax time is one of the simplest plans to put in place. Begin by reviewing last year's tax bill. Divide the total by 12 for a monthly savings plan or by 4 for a quarterly savings approach. Set aside this amount in a separate account for year-end taxes. Connect with your accountant on this to ensure it doesn’t impact your cashflow.

Building a Capital Expenditure Budget

A well-planned capital expenditure budget is your roadmap for large purchases. Typically, these expenses should amount to 2-6% of your gross revenue. It’s wise to consult with your CPA for tax incentives before making significant buys.

• Step 1: Take Stock – List all existing equipment/property, noting the purchase year and estimated value. This aids in depreciation and anticipates replacements within the next 5 years.
• Step 2: Catalog Anticipated Expenditures – List all expected capital expenditures over the next 5 years. For instance, a new computer server might be on the horizon.
• Step 3: Outline Purchase Plans – Note the purchase timeline and estimated costs. For example, you decide you want that new computer server in 2 years (24 months) for approximately $18,000.
• Step 4: Monthly Saving Plan – Calculate the monthly amount needed to afford the purchase by the target date. $18,000 / 24 months = $750 per month into a savings account.

Even if finances are tight, save whatever amount possible. Every bit stashed away alleviates the year-end strain. If you need more financial support, reach out to our Coaching Team for a Financial Analysis. By running a financial analysis, we can help you identify specific, actionable opportunities to lower expenses and increase profitability in myriad ways. Your VGP practice coach will analyze your P&L statements and KPIs, compare your numbers against industry benchmarks, and create a custom plan for practice improvement and growth. Together, you will set financial goals unique to your practice to set you up for success!