As vendors are gearing up for the New Year, now is an excellent time to reevaluate the effectiveness of 2012’s business practices. Before transitioning into 2013, take these four steps into consideration and make sure you’ve covered all of your financial bases to ensure even more profits.
Start by talking to a CPA. Even if you don’t regularly consult an accountant, speaking with an advisor will help you discern a long-term strategy in addition to helping you prepare for the next tax season. This additional perspective can help you be more prepared for everything from tracking expenses to filing tax forms.
Next, take another look at how you classify your business. Are you a sole proprietorship, partnership or incorporated? If you’re considering forming an LLC to mitigate some financial risk and reshape your approach to taxes, this is another item to discuss with an accountant. In general, your business entity should reflect your booth’s revenue, which may change if you have worked flea markets for several years.
Another important step is to assess your taxes from this and last year. Have you underpaid or overestimated your payments in previous years? Get your finger on the pulse of what your booth has earned to date and organize this information well in advance of tax season. Keep a ledger and audit it periodically to be sure it’s up to date.
Additionally, make sure that you’re keeping your vendor finances separate from your personal expenses, if you have not yet done so. Whether you’re a sole proprietor or an LLC, it’s a good practice to open a separate checking and savings account for the revenue generated by your flea market business. Nellie Akalp, CEO of CorpNet, the online legal document filing service, recommends opening a dedicated savings account into which vendors may transfer 25 percent for each payment received. “This strategy makes it far less painful when it’s time to pay self-employment or small business taxes.” She also suggests opening a business credit card, so that each statement serves as an easily audited trail of the year’s expenses. This way, every wholesale purchase is documented by the credit card company and easily obtained when the information is needed in the spring.