In the fractional CFO profession, we see business managers forget critical year-end tasks as they mentally check out and to go on vacation. Here are the top 4 financial mistakes to avoid this winter.
Pay your deferred social security taxes
Remember how the government let you delay paying Social Security taxes? Back in March 2020 the CARES act threw money at businesses in dozens of ways (most memorable being the PPP.) But most businesses also elected to defer paying their social security taxes for most of 2020.
That deferred bill is due. You are required to repay half of that by 12/31/21, and the rest by 12/31/21 or face IRS penalties. Don't count on your payroll provider to do it automatically - you need to do it through the IRS website (more instructions in this article.)
Manage Great Resignation risk
In modern American businesses, employee turnover expense is too great for CFO's to responsibly ignore. Dozens of Inc.com articles have been written about The Great Resignation and all point to the same solution: take time to care for your employees. Simple to say, challenging to implement.
How can something so warm and fuzzy be a financial strategy? Budget training for your managers to improve their leadership. Bring in DEI consultants to build justice into your organization. Give your managers more time to listen to and mentor employees (which might mean fewer growth initiatives.) Less growth is ok - trading profit growth for lower risk is often the most financially responsible decision.
Raise your prices
If you have not done so already, you need to raise your prices. There are two reasons to do this now. First, your costs have likely gone up already or will go up in the coming year (perhaps because The Great Resignation will soon take key employees away from you.) Second, everyone is raising prices now, so, from a marketing perspective, you will be a voice amongst the crowd. That means lower customer shock and churn. If you wait until next summer to raise prices, you will stick out in the market and possibly scare away customers.
Secure a loan before interest rates rise
With inflation on the rise, the Federal Reserve is expected to raise interest rates around March of 2022. That means NOW is a great time to borrow money before the cost to borrow increases. Borrowing money is also one of the top 5 inflation strategies.
Happy Holidays everyone, and I hope you have a prosperous New Year!