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Five Steps to Consider During Your Annual Business Review

Once a year I go to the doctor for my annual physical. Once a year I bring my car to the local mechanic for a tune up. And similarly, at least once a year you should pull down the blinds in the office, pull out your ledgers and do a comprehensive review of your business. Here are five steps to consider before the end of the fiscal year comes to a close.

1. Review your balance sheet

Your business’ balance sheet is the lifeblood of your organization. The balance sheet provides you with an up to date glimpse of your business’ financial position. It displays information in terms of your assets, liabilities, and equities. Without this analysis, a business owner (and/or their business partner) could make decisions that ultimately have a negative impact on the company.

For many business owners, their business and personal finances are closely related. With the help of a savvy financial planner, you may have an opportunity to leverage your business dollars to not only help your business, but potentially help your personal planning needs as well.

2. Invest in retirement now

If you own a business, you have the ability to implement a qualified plan. By putting a qualified plan in place, it allows you to take advantage of tax deferral rules that will help to maximize your tax savings today, while simultaneously helping you achieve a financially secure retirement.

Due to the various qualified plan options available (SEP IRA, 401(k), Defined Benefit Plan, etc.), it would be in your best interest to consult with your financial advisors on what plan is the best fit for your goals. By working with your trusted advisor(s), possibly a CPA, insurance agent, tax professional or combination of these professionals, they can help guide you to pick the option that will be beneficial to both your business and personal financial health, both now and in the future.

3. Review your Executive Benefits

With the economy humming along, there is not a lack of job opportunities out there. It’s vital to offer a comprehensive benefits package to your employees, but sometimes that’s not enough. For those key employees, it may take more. Deferred compensation plans, executive bonuses and split dollar arrangements are becoming more and more commonplace as ways to selectively retain and reward top employees.

4. Create a Business Succession Plan

After reviewing your financial documents, do you know what your business is worth? Do you have a business succession plan in place? Do you and your partner have a buy sell agreement? Is it funded?

A business succession event will happen at some point in the future, the problem, is that we can’t predict when it will happen or why. We simply know that it’s coming. Any business without a business succession plan in place (including a proper valuation and funding), will face uncertainty and instability in the future.

5. Give to charity

Now why donate to a charity? For most, the answer is simple: people want to help. Whether you’re giving to a charity that has personally impacted your life, or just donating to a cause that you believe in, giving to charity can have a huge impact on those in need. By being socially responsible, donating can additionally create a positive association with your business’ brand.

Of course it’s important to understand the nuances that surround which types of charities allow your contributions to be deductible, as there are many ways to make a charitable gift. These range from the simple (outright gifts of cash) to the complex (charitable lead or remainder trusts).


Your business review shouldn’t be an end-of-year scramble. Instead, it should involve a consistent, ongoing conversation with your tax attorney, accountant and advisors. With this ongoing communication and planning, you can better position your business to help you carefully manage your balance sheet and tax situation. When you establish these relationships with financial professionals, you’re less likely to be caught off guard and are more likely to make the “right” decision as your business grows.