It is extremely challenging to operate a small or medium-sized business, and not all days are created equal.
For instance, about 20% of retail sales happen during the holiday season. Some businesses are wholly seasonal, such as snowboarding shops. But every business has peaks and valleys, whether it's tax season for accountants or Valentine's Day for florists.
Those busy times are often the core of business success. However, when the peaks and valleys are extreme, they present financial challenges for the business. A shop selling bait and fishing gear at a lake in New England may do most of its business between Memorial Day and Labor Day. However, its business loan may still be due the first of every month, whether or not anglers are lining up for lures and nightcrawlers.
While being a seasonal business sets a business apart from others, it's still a business. It has to do all of the regular things any business does, such as:
Related: How to Talk About Company Finances with Your Team
Because income from a seasonal business happens over a limited period of time, it needs to be spread across time without income.
A skiing-related business such as a lodge, a ski shop or even an Uber taking skiers from a train station to a ski resort in season may have expenses that stretch all year long. The ski shop may have few customers in July (in the northern hemisphere, anyway), but it may still owe monthly rent or semi-annual property taxes. The Uber driver's car payments happen every month, even if nobody is looking for a ride from the train station to the lodge.
Fluctuating cash flow is the key challenge for a seasonal business. Here are the things that this type of business has to manage:
Related: 3 Ways to Shore Up Your Business Finances in a Tight Economy
Because a business can't rely on roughly the same income every month, it needs to be on top of all related expenses and be ready with a plan. You can move some activities to the off-season. That's a good time for employee training or your budgeting process. The off-season is also a good time to make plans for advertising. Rates may be lower, and advertisers will be happy to have their future slots sold.
If you hire employees, make yourself familiar with IRS Form 941 for seasonal employers. This is how a seasonal employer reports income taxes, Social Security tax or Medicare tax withheld from employee's paychecks and pays the employer's portion of Social Security or Medicare tax.
If there are one or more quarters during the year that you won't have employees, you won't have to file for that quarter. Just remember to check the "seasonal employer" box on Form 941 for every quarter that you do file.
Related: The Basics of Using Credit Cards to Fund Your New Business
Document management systems capture all relevant financial data, read them through optical character recognition (OCR) and store the data in the cloud. Users can manipulate the data from their desktop or their mobile device on the road.
Use a DMS to:
To make your seasonal business succeed so that you can enjoy the benefits of a low-pressure slow season, take the time to be accurate. That will ensure you know what needs to be paid when cash flow isn't coming in.
Master the Highs and Lows of Running a Seasonal Business With These Expert Bookkeeping Tips
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22.12.2023
It is extremely challenging to operate a small or medium-sized business, and not all days are created equal.
For instance, about 20% of retail sales happen during the holiday season. Some businesses are wholly seasonal, such as snowboarding shops. But every business has peaks and valleys, whether it's tax season for accountants or Valentine's Day for florists.
Those busy times are often the core of business success. However, when the peaks and valleys are extreme, they present financial challenges for the business. A shop selling bait and fishing gear at a lake in New England may do most of its business between Memorial Day and Labor Day. However, its business loan may still be due the first of every month, whether or not anglers are lining up for lures and nightcrawlers.
While being a seasonal business sets a........
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