It doesn’t have to be overwhelming for small business owners and the self-employed with side gigs to manage their wealth-building. It takes putting three simple concepts to work with corresponding plans of action to ensure you have what you need for retirement and other personal financial goals.
Cash flow, tax planning, and asset building are the three essential areas to focus on building your wealth. These three areas are the perfect combination if you stay on target and get good financial guidance along the way.
No amount of future financial planning is going to work until you have cash flow management under control. Having the immediate resources to address all practical business transactions and expenses can make or break most small businesses. What are some basic ways to protect and maintain your company’s cash flow?
- Tracking and Forecasting – Track your company or personal spending to monitor your daily, weekly, monthly, and yearly expenses. Doing so will help you prepare for future costs and assess what spending can be eliminated to reach your goals better.
- Projection – Cash flow projection is closely related to forecasting. Project your cash status for the next 6-12 months by creating a spreadsheet that includes your current balance, cash in and cash out columns, how money is used, and the total flow and ending balance. Coupled with your income and expenses from your tracking, you can project future cash flow.
- Budgeting – Once you have your expected cash flow figures, you can create a solid budget to follow. A budget ideally accounts for every dollar spent and reduces the temptation to spend money on impulse ideas, thus protecting your cash flow.
As soon as you’ve filed your tax return, it’s time to create or go over the next year’s tax plan. Creating and following a strategic tax plan helps you make immediate financial decisions that will benefit your business at the end of the current year as well as for years to come, ultimately raising your net worth. The whole point of tax planning is to be sure you are taking advantage of current and future tax credit opportunities that build and protect your wealth, rather than needlessly throwing money away.
Developing and growing assets is the key to building wealth. An effective wealth-building plan includes dealing with cash flow and tax planning since paying off debt, having a fluid cash flow on hand, and protecting that money with proper tax planning allows you to invest and grow your wealth, even if you start with very little. You might invest in many avenues, depending on your goals, age, resources, and current financial environment. Be sure you have the proper financial guidance to create the best possible wealth-building plan. The sooner you start, the better, so you can work on building wealth during your most productive years.
Wishing you wealth and prosperity,
Charles Myrick and Team
Your Myrick CPA professionals can help you focus on setting up short- and long-range financial plans that combine having adequate cash flow with tax planning and asset building. Laws and opportunities can shift over the years, making your path tricky to navigate. Your life circumstances may often change as well. Make sure you hire a professional financial advisor to help you navigate these shifting times and life events. We know how to build and protect your wealth. Call or go online to contact us today.