Description
Key business metrics are vital to follow to minimize your tax burden and make your business more profitable. Hear insights about:
- Why it’s vital to know your key business metrics and numbers so that you can make good business decisions
- Where to look and which key business metrics to track that can help you save money on your taxes
- Why your business cash flow is crucial, and why you should always be aware of your Accounts Receivable, Accounts Payable, and Profit and Loss analyses
- Why you should be checking your numbers and key business metrics on a regular basis throughout the year
- What “basis” is and why it is an important tax concept to understand, and what actions will give you basis or cause you to lose basis
- Why taking too much money out of your business can be an unexpected surprise that can cost you by disallowing you to take loss offsets
- Why you can have a strong, viable business and still have zero basis even if you’ve got great cash flow
- Why the type of business structure you’re operating under can impact whether or not you have basis
- Why understanding your numbers and following your key business metrics can help your business operate more smoothly and become more profitable
Know Your Numbers: Key Business Metrics
In this week’s solocast episode of the Progressive Agency podcast, I discuss why it is so important that you track your key business metrics and understand the numbers that power your business. If you aren’t following your numbers and regularly checking in with your tax professional, you could be in for unexpected surprises at tax time that could cost you.
Your Profit and Loss analysis, Accounts Receivable (AR), and Accounts Payable (AP) provide powerful information and insights into your business, and so understanding and tracking these key business metrics is crucial. Not only will it help you make better decisions and avoid costly mistakes, understanding your numbers can increase the profitability of your business and open new opportunities you would have missed out on otherwise.
Do You Have Basis?
Your tax basis is another vitally important figure. Basis is typically calculated as how much you’ve invested in your business, and it’s calculated differently between business structures. But having positive basis is important, because if your basis goes into negative numbers, it could prevent you from taking deductions to offset losses your business has experienced. Basis can fluctuate based on various factors including how much you’ve paid yourself out from your business over the course of the year, and so it can be helpful to consult with an experienced tax professional to help you understand how much basis you have (or don’t have) and what the tax implications will be.
I invite you to reach out to me if you have any questions or concerns about your key business metrics and tax basis, my team and I will be happy to help you better understand these concepts. And of course, please visit https://craigcodyandcompany.com/agency-podcast/ for more informative, money-saving podcast episodes like this one.
Additional Resources:
- Website: www.craigcodyandcompany.com
- Twitter: @CraigC2742
- LinkedIn: https://www.linkedin.com/in/craigcodycpa
About Craig Cody:
Craig Cody is a Certified Public Accountant, Certified Tax Coach™, business owner, and the host of The Progressive Dentist Podcast and The Progressive Agency Owner Podcast. Prior to his current work, Craig spent seventeen years with the NYPD, where he retired as a Lieutenant in September 2000. Craig is an expert in helping his clients legally reduce their tax liabilities and keep more of their money. Through his podcast, Craig helps dentists grow their practices through smart financial decisions and through financial education of the kind that isn’t offered in dental school.