Is Your Business on Track? A Midyear Financial and Tax Checkup

The halfway point of the year is the perfect time to ask an important question: Is your business on track to meet its financial goals?

A midyear financial and tax checkup gives you the opportunity to evaluate your performance, identify potential challenges, and make adjustments while there’s still time for those decisions to make a difference. Rather than simply looking at where your business has been, it’s about gaining the financial clarity to move forward with confidence.

Start by Reviewing Your Financial Performance

Begin by reviewing your financial results for the first six months of the year.

Revenue is an important measure, but it doesn’t tell the whole story. A business can increase sales while seeing lower profitability if payroll, material costs, or operating expenses are growing even faster.

Compare your year-to-date results with:

• Last year’s performance
• Your annual budget
• The goals you established at the beginning of the year

As you review the numbers, don’t just identify what’s changed—determine why.

For example:

• Is one service line outperforming the others?
• Have labor or material costs increased?
• Is one location more profitable than another?
• Have customer buying patterns shifted?

Understanding what’s driving your results helps you focus on the opportunities and challenges that matter most during the second half of the year.

Evaluate Your Cash Flow—Not Just Your Profit

A profitable business doesn’t always have healthy cash flow.

Customers may not have paid their invoices, inventory levels may have increased, or cash may have been used for equipment purchases, loan payments, or owner distributions.

Instead of looking only at your current bank balance, ask:

• When are outstanding customer payments expected?
• What significant expenses are coming up?
• Is the business entering a slower or more cash-intensive season?
• Are accounts receivable taking longer to collect?

A cash flow forecast can identify potential pressure points before they become urgent. If you anticipate a cash shortage months in advance, you have time to improve collections, manage spending, adjust distributions, or arrange financing. Those options become much more limited once cash is already tight.

Update Your Financial Forecast

The budget you created at the beginning of the year reflected the best information available at the time. Six months later, your business has likely changed.

Perhaps revenue is growing faster than expected. Maybe hiring has been delayed, operating costs have increased, or new opportunities have emerged.

Updating your forecast isn’t a sign the original budget failed—it’s simply using current information to make better decisions.

An updated forecast can help you:

• Set realistic expectations for year-end results
• Plan for future cash needs
• Allocate resources more effectively
• Make informed business decisions

It can also be valuable to evaluate multiple scenarios. What happens if sales continue at their current pace? What if a major customer delays payment? What if an expansion opportunity arises? Considering these possibilities can help you make decisions with greater confidence.

Revisit Your Tax Strategy

Midyear is also one of the best times to review your tax projection.

Tax planning is most effective when there’s still time to act. Waiting until the final weeks of the year can limit your options.

Your year-to-date financial results, combined with an updated forecast, can help estimate full-year taxable income and determine whether estimated tax payments or withholding should be adjusted.

This is also a good time to discuss significant business decisions that could affect your tax situation, such as:

• Purchasing equipment
• Hiring employees
• Increasing owner compensation
• Making large owner distributions
• Acquiring property
• Expanding the business

Each of these decisions can impact your taxes, cash flow, and overall financial performance. Reviewing them before moving forward provides the opportunity to evaluate the full financial picture, not just the tax consequences.

Bring Your Financial and Tax Planning Together

Financial planning and tax planning work best when they’re considered together.

Every major business decision affects multiple areas of your business, including profitability, cash flow, taxes, and long-term growth. Looking at those factors together helps reduce surprises and supports more informed decision-making throughout the year.

Finish the Year with Confidence

Your financial statements tell you what has already happened. A midyear financial and tax checkup helps you determine what happens next.

By reviewing your financial performance, forecasting cash flow, updating your projections, and planning for taxes now, you can identify concerns early, capitalize on opportunities, and approach year-end with greater confidence.

Key Takeaways

• Review your financial performance against your budget and goals.
• Evaluate cash flow, not just profitability.
• Update your forecast using current business conditions.
• Review your tax strategy before year-end to identify planning opportunities.

Ready to see the path forward? Contact your Wilkins Miller advisor to schedule a midyear financial and tax checkup and discuss strategies to help your business finish the year strong.