Start the Year Strong: A Financial Checkup for Your Business

Taking inventory of your business’ financial health is important throughout the year. But as we usher in a new year, this season offers both a time of reflection and forward thinking for future success. A comprehensive financial picture is especially important given recent changes to the tax code.

Key Areas for Your Financial Checkup

A comprehensive financial review goes beyond a quick look at your balance sheet. It involves a deep dive into your financial data to build a solid foundation for the year.

• Review and Analyze Last Year’s Performance: Start by examining your core financial statements from the previous year: income, balance sheet, and cash flow. This review helps you understand your profitability, liquidity, and overall financial health. A common reason new businesses fail is cash flow problems. Analyzing key financial ratios, such as your debt-to-equity ratio or profit margin, can provide critical insights into your company’s stability and operational efficiency.
• Update Budgets and Financial Forecasts: Use the insights from your year-end review to create a realistic budget for the new year. A well-planned budget acts as a roadmap, guiding your spending and investment decisions. Develop a cash flow forecast to anticipate potential shortfalls and surpluses, allowing you to manage your working capital more effectively.
• Evaluate Your Contracts, Technology, and Team: The new year is an ideal time to review your operational infrastructure. Assess your vendor contracts, software subscriptions, and equipment to ensure they still meet your needs and provide a good return on investment. Next, look at your staffing for any expertise gaps to fill or opportunities for employee training and development. Investing in your team can increase retention and drive long-term success.
• Make Retirement Contributions: If you are small business with a SEP IRA (Simplified Employee Pension), you can make contributions of 0-25% of your total compensation (adjusted for self-employment tax) up to $70,000 by the filing date of your business return. If you have a SIMPLE IRA (Savings Incentive Match Plan), then you may make your employer matching contributions up to the filing of your business return as well. Solo 401(k) plans also allow contributions up to your tax filing deadline. If you do not have a small business retirement plan, you may also make your Traditional or Roth IRA contributions up to filing.

Navigating the New Tax Landscape

A major consideration for the next year and beyond is the One Big Beautiful Bill Act, which was signed into law on July 4, 2025. This legislation introduces substantial tax reforms that directly impact small businesses. Understanding these changes is essential for optimizing your tax strategy.

Some of the most significant considerations for businesses include:

• Permanent 20% Qualified Business Income Deduction: The 20% deduction on qualified business income, a major benefit for pass-through entities like sole proprietorships, partnerships, and S corporations, is now permanent.
• Increased Section 179 Expensing: The law has more than doubled the maximum amount a small business can immediately deduct for new equipment and software purchases up to $2.5 million.
• Enhanced Employer-Provided Child Care Credit: To help businesses support their employees, the tax credit for qualified child care expenses has increased. The maximum credit is now $500,000, and for eligible small businesses, it can be as high as $600,000.

To understand more about other changes that impact your specific business, talk with a qualified tax professional.

Take Control of Your Finances

Conducting a thorough financial checkup at the beginning of the year is an investment in your business’s future. By understanding your financial position and planning strategically, you can build resilience and seize opportunities for growth.

Get a clearer picture of your company’s financial health through our Financial Ratios Calculator or our Cash Flow Calculator. For personalized guidance tailored to your business’s unique needs, contact your WSFS Business Banker.

BY MARK BRADFORD Mark Bradford is the Director of Wealth Planning at Bryn Mawr Trust Advisors, where he leads the wealth planning team…