CVW News 4th Quarter | 2024

Table of Contents

How to Make 2025 Your Most Profitable Year Yet

By Caroline Van Wassenhove, CPA & Founder of CVW Accounting, Inc.

This article is featured in Dakota Design Company’s Year End Playbook.

Understand Your Financial Position

Before looking at 2025 profitability, it’s important to understand your company’s current financial position. A good indicator of the future is the past, and financial reports like the Balance Sheet, Income Statement, and Cash Flow Statement, illustrate just that. They provide valuable information about the company’s profitability, financial stability, and growth potential to help with key decisions moving forward.

Financial reports are a great foundation for building a company plan. You can use them to create a budget with your profitability goals in mind. A budget indicates the revenue you expect to come in offset by your expected expenses, resulting in monthly profit. By looking ahead, you can identify the months that may be less profitable giving you time to make informed decisions and necessary adjustments. If you wait to simply react, then it’s likely too late. Understanding where you are now and where you need to be, will help you make 2025 your most profitable year yet.

Learn From Past Performance

With every business, it’s important to know who your ideal client is. Ideal clients are generally quick decision-makers, place high value on your services, and result in high profitability. One of the keys to attracting your ideal client is to know your ideal profit.

Looking at your past performance allows you to improve your future performance. A good way to identify a desirable project (and price it correctly) is to look back at your past projects. Project profitability reports help you determine your ideal profit. They identify the project’s true cost of reselections, going over budget, not billing back other charges, and taking too long, which should be minimized or avoided on future projects. They also help you identify whether the markup or the supplier discounts were sufficient to sustain the project and make a strong profit.

Past project profitability reports help you to make informed decisions on future projects. They allow you to attract your ideal clients, better price your projects, streamline your processes, and identify ways for you to add more value, which should ultimately lead to your most profitable year yet.

Seek to Improve

One of the keys to a company’s profitability is to strive for continuous performance improvement. If you’re not seeking to improve, you are likely falling behind, and eventually, the company may become stagnant. A business' longevity is built from a strong foundation with long-term strategies and sustainable practices in place.

The following are examples of such practices and strategies for a profitable 2025:

• Implement systematic processes and improvements
• Create efficiencies through automation and streamlined processes
• Identify and eliminate waste and nonessential processes
• Identify and mitigate risk
• Leverage technology
• Keep high-performing team members (low turnover)
• Implement cost-effective strategies and leverage supplier relationships
• Put a plan into action to handle & minimize disruptions (i.e employee turnover)
• Partner with professionals in other areas of expertise

Year-End Tips & Checklist

To ensure a smooth year-end close and timely financial reporting, we recommend completing the following by early January:

*Year-End Payroll Review Includes the Following:

• Verify business & employee information
• Ensure 2024 compensation meets the "reasonable compensation" requirement for S Corporation officers (if applicable)
• Set year-end bonuses and any additional officer salary, as applicable
• Inform employees about unused benefits (PTO, flex spending, etc)
• Provide payroll company with any health insurance premiums paid on behalf of 2% shareholder-employees for W2 reporting purposes (if applicable)
• Set compensation and benefits/deductions for next year
• Initiate next year's payroll schedule

In addition to the list above, we also recommend reviewing your current year performance and identifying a plan for next year (i.e. budget, forecast, cashflow projections).

If you have any questions on what you need to complete or submit for year-end reporting, please check in with your Accounting Manager.

ShareFile - Client Portal Guide

We are super excited about our transition to ShareFile. This is designed to make accessing and managing our shared files more seamless and secure. As we continue to expand our use of ShareFile, we’ve prepared a ShareFile Client Portal Guide to assist you. This comprehensive guide includes bookmarks for easy navigation, allowing you to quickly find the information you need.

Client Portal Login: https://cvwaccountinginc.sharefile.com/

Subdomain: cvwaccountinginc

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