So you are reflecting and seeing the results of another hard-working year pay off! Good for you! Hopefully you are in a strong position of profitability, which opens up more opportunities for you to save, invest back in the company or improve your lifestyle. Trying to tie up loose ends in your books and plan for your start to 2017? Not only should your last decisions of the year be strategic, based on your lifestyle wants and business needs, but you should also ask your professional advisors for legal opinions on those choices.
Here are a few general rules of thumb* we see trending:
- Aim to keep 30% of profits in cash for taxes
- Contribute 10% of you salary into your retirement accounts
- Pay off long term debt before the purpose of the purchase is obsolete
- Keep owner distributions to around 10% of sales based on a “reasonable” salary amount & your lifestyle
- Keep 10% of total income in the business to reinvest next year
*Not intended to be tax advice. Please consult your financial advisors, CPAs, etc for legal tax advice.
These rules of thumb differ by industry. Some of them may be useful to you when making spending decisions, planning for next year or evaluating your businesses performance this year.
Need help correcting journal entries or ironing out your budget plans for next year? Call Us! I am Kathy Dise from BudgetEase here to make YOU more profitable. You can reach me at email@example.com.