Top Cash Flow and Tax Strategies Businesses Should Consider

7 Tax Strategies for Atlanta Small Businesses

Having a handle on cash flow is an important part of accounting for small businesses, particularly with the unpredictability of the COVID-19 pandemic and its impact on business.

In addition to strategies specific to cash flow, small businesses might be able to take advantage of some tax relief measures included in the Coronavirus Aid, Relief and Economic Security (CARES) Act that could positively impact your cash position.

Here are seven strategies to consider for improving your 2021 cash flow:

1. Create a rolling three-month cash flow projection – a cash flow projection is a forecast of all the money coming and going out of your business. It includes all of your income and expenses, and anticipates payments and receivables. In addition to preparing one for the entire year, it’s a good idea to keep a three-month rolling version that can be compared to actual results and adjusted as necessary.
2. Review vendor payments and consider taking advantage of any extensions – if you usually pay your bills the week they come in, consider waiting until the actual due date in order to keep more cash on hand. Many vendors are amenable to extensions right now and recognize being paid a bit later is better than not getting paid at all. A vendor who usually requires payment in 30 days might be fine to move to a 60-day pay period.
3. Keep issuing invoices and follow up – make sure you continue to issue your invoices on a regular, timely basis. It might be a good idea to also send a reminder the day before the invoice is due. You want to stay top-of-mind with your customers when it comes to payment.
4. Cut costs and automate – if you send paper invoices, now is a good time to look at automating your system or at least emailing these. Take advantage of technology to cut some costs. Cutting down on any business meals and travel that haven’t been eliminated can also save money. 
5. Consider Paycheck Protection Program (PPP) round 2 – if you got a PPP loan the first time, you might still be eligible for more funds. In round 2, companies with 300 or fewer employees that can show a 25% drop in gross receipts in one quarter between 2019 and 2020, can qualify for a second PPP loan. If you didn’t apply for a PPP loan the first time around, consider one as the US government has made more funds available to first-time lenders. Forgiveness has been expanded and simplified since first introduced in spring 2020, making these loans more attractive.
6. Assess whether you qualify for the employee retention tax credit – the Taxpayer Certainty and Disaster Tax Relief Act signed in December extended the employee retention tax credit (originally introduced in the CARES Act) to wages paid through June 30, 2021. Rules for the credit have been updated and certain points clarified. The overall purpose remains the same: to provide a tax credit for wages paid by a business that either suspended operations or had a significant decline in gross receipts due to the COVID-19 pandemic.
7. Look into other CARES Act tax savings opportunities – these include net operating loss carrybacks for losses incurred in 2018, 2019 and 2020 to prior tax years. Depending on the year of loss there are specific deadlines for filing amended returns, so check with your CPA.

The CARES Act also raised the limitation for certain business interest from 30% of adjusted taxable income to 50% for tax years 2019 and 2020. Again, there are complex rules and specific deadlines for taking this election. Check with your CPA.

A Local Accounting and Bookkeeping Firm For Small Atlanta Businesses

Rialto Accounting can help you review and update your cash flow strategies, as well as help with tax planning strategies that can positively affect your cash position. Our experienced accountants can assist you with financial reporting, taxes, payroll and budgeting. When you work with Rialto Accounting, we put your needs first. 

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A.J. Dote

Founder, CPA at The Rialto Group

A.J. earned his finance and accounting expertise through more than a decade of work, including seven years in public accounting, 6 of which were spent rising through the ranks at PwC. While at PwC, he worked closely with many clients, including some of the most recognizable names in Georgia business.

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