Roberts CPA | Accounting & Tax Blog

Managing Estimated Taxes When Income Fluctuates

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For businesses with uneven or unpredictable income, estimated taxes can be one of the most challenging aspects of tax compliance. Unlike employees who have taxes withheld automatically from paychecks, many business owners must calculate and submit estimated payments throughout the year. When income fluctuates, getting those estimates right requires careful attention.

Estimated taxes are generally based on projected annual income. When revenue changes significantly from quarter to quarter, those projections may no longer reflect reality. For example, a seasonal business may earn the majority of its income during a few high-demand months, while a consultant may experience large gaps between projects. Without adjustments, estimated payments can easily become too high or too low.

Underpaying estimated taxes may result in penalties and interest, even if the business ultimately pays the correct amount at year-end. Overpaying, on the other hand, can strain cash flow by tying up funds that could otherwise be used for operations or growth.

Businesses with fluctuating income often benefit from a more dynamic approach. Rather than relying on last year’s tax liability alone, regularly updating income estimates throughout the year can improve accuracy. Tracking income monthly or quarterly helps business owners adjust payments as revenue changes.

Examples of situations where estimated taxes commonly fluctuate include:

  • Seasonal businesses with predictable busy and slow periods
  • Companies experiencing rapid growth or sudden revenue drops
  • Businesses that rely on commission-based or project-based income
  • Owners adding or losing major clients during the year

In some cases, using the annualized income method may provide a more accurate way to calculate estimated taxes. This method aligns payments with when income is actually earned, rather than spreading tax liability evenly across the year.

Managing estimated taxes is ultimately about balancing compliance and cash flow. Businesses that monitor income trends and adjust payments proactively are better positioned to avoid penalties while maintaining financial flexibility. Regular communication with a tax professional can help ensure estimates remain aligned with current performance.

How to Save for a House While Investing for Retirement

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Saving for a house and investing for retirement are two of the biggest financial goals many people pursue—but trying to do both at the same time can feel like a balancing act. One requires upfront cash for a near-term purchase, while the other is a long-term investment in your future. How do you prioritize one without sacrificing the other?

The truth is, with the right strategy and discipline, you can save for a home while also building your retirement nest egg. Here’s how to make both goals work in tandem.

Step 1: Define Your Goals Clearly
Before you start juggling savings priorities, get specific about your targets:

  • Home goal: How much do you need for a down payment? When do you want to buy?
  • Retirement goal: How much do you want to retire with, and at what age?

Write these down and give each a timeline. This helps you stay motivated and make informed decisions about trade-offs along the way.

Step 2: Build a Budget That Reflects Both Goals
Treat both goals as line items in your budget. Your monthly income should cover:

  • Essentials (rent, utilities, groceries)
  • Minimum debt payments (if any)
  • Retirement contributions
  • Home savings contributions
  • Emergency fund (3–6 months of expenses)

If there’s not enough room to fund both goals, look for ways to cut expenses or increase income before you sacrifice your future savings.

Step 3: Start with Your Employer’s Retirement Match
If your employer offers a 401(k) match, prioritize contributing at least enough to get the full match. That’s free money—and passing it up is leaving part of your paycheck on the table.

Once you’ve captured the match, you can redirect additional funds toward your house savings.

Step 4: Open a Dedicated House Savings Account
Keep your house fund separate from your checking or emergency savings. This could be a high-yield savings account or money market account—something safe, liquid, and earning interest.

Avoid investing this money in the stock market if your goal is within the next 3–5 years. Market volatility could derail your plans just when you’re ready to buy.

Step 5: Automate Your Contributions
Set up automatic transfers for both retirement and house savings. Treat them like bills that must be paid every month. Automation removes the temptation to spend and ensures consistency.

Step 6: Consider Retirement-Friendly Ways to Fund a Home
If you’re short on a down payment but have money in retirement accounts, you may have options:

  • IRA withdrawal: First-time homebuyers can withdraw up to $10,000 from a traditional or Roth IRA without the 10% early withdrawal penalty (though you may still owe income tax on traditional IRA funds).
  • 401(k) loan: Some plans allow you to borrow against your 401(k) and pay yourself back over time, with interest. But tread carefully—if you leave your job, the loan may be due immediately.

These should be last-resort options. Withdrawing retirement funds early can hurt your long-term growth and future security.

Step 7: Reevaluate Regularly
Life changes—so should your plan. Every 6–12 months, revisit your goals, your progress, and your budget. If you get a raise, bonus, or reduce expenses, consider increasing contributions to both funds.

Also keep an eye on changes in mortgage rates, home prices, and retirement account performance.

Final Thoughts
It’s not easy to save for a house and invest for retirement at the same time—but it is possible. The key is to create a plan that honors both goals, stays flexible, and makes the best use of your financial resources.

Think of your future home as a stepping stone, and your retirement as the foundation for long-term freedom. With steady effort and smart planning, you don’t have to choose between them—you can build both, one dollar at a time.

Mastering Business Budget Forecasting: A Key to Smarter Financial Planning

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Budget forecasting is a vital tool in the arsenal of any successful business. It enables leaders to make informed decisions, anticipate financial outcomes, allocate resources wisely, and steer the company toward long-term sustainability. Whether you’re a startup planning your first fiscal year or an established enterprise aiming for growth, mastering budget forecasting can be the difference between thriving and merely surviving.

What Is Business Budget Forecasting?
Budget forecasting is the process of estimating your business’s future financial performance based on historical data, current trends, and projected growth. Unlike a static budget, which outlines planned expenses and revenues for a specific period, a forecast is a dynamic model that evolves with changing conditions.

Forecasts can be short-term (monthly or quarterly) or long-term (annual or multi-year), and they help businesses:

  • Anticipate revenue
  • Manage expenses
  • Adjust strategies in response to market shifts
  • Secure funding or loans
  • Evaluate the feasibility of new initiatives

Key Components of a Budget Forecast
To create an effective forecast, you need a clear picture of both your income and expenses. Here are the core elements:

1. Revenue Projections
Estimate how much income your business will generate from sales or services. Use:

  • Historical sales data
  • Market trends
  • Sales pipeline analysis
  • Seasonality and economic indicators

2. Cost of Goods Sold (COGS)
Estimate the direct costs associated with producing your goods or delivering services. This helps determine gross margin.

3. Operating Expenses
Include fixed and variable costs such as:

  • Rent and utilities
  • Salaries and benefits
  • Marketing and advertising
  • Software and subscriptions
  • Professional services

4. Capital Expenditures
Plan for one-time or infrequent purchases like equipment, vehicles, or property upgrades.

5. Cash Flow and Working Capital
Factor in when money actually moves in and out, not just when it’s earned or incurred. A budget forecast should align closely with your cash flow forecast.

Steps to Create a Budget Forecast
1. Review Past Financial Performance
Start with a detailed analysis of your historical financials. Identify revenue patterns, seasonal fluctuations, and fixed vs. variable costs.

2. Set Clear Objectives
Are you aiming to grow, cut costs, expand into new markets, or maintain stability? Your goals will shape your assumptions and priorities.

3. Make Assumptions
Forecasting relies on assumptions about pricing, customer growth, market demand, inflation, and costs. Be realistic—and document these assumptions clearly.

4. Build the Forecast
Use spreadsheet software or financial forecasting tools to project revenue and expenses over your chosen time frame. Consider creating multiple scenarios:

  • Best-case scenario: Optimistic growth, strong sales
  • Worst-case scenario: Market contraction, higher costs
  • Most likely scenario: A balanced, data-driven estimate

5. Monitor and Update Regularly
Business conditions change. A good forecast isn’t static—it should be reviewed monthly or quarterly and adjusted based on performance and new data.

Tools and Software for Forecasting
Manual spreadsheets work for small businesses, but as complexity grows, consider tools like:

  • QuickBooks, Xero – For basic budgeting and tracking
  • Float, Fathom, LivePlan – For forecasting and cash flow planning
  • Excel with custom templates – For more control and customization

Common Forecasting Mistakes to Avoid

  • Overestimating revenue: Be conservative and base estimates on solid data.
  • Underestimating expenses: Don’t forget hidden or irregular costs.
  • Ignoring market trends: Economic shifts, regulations, and competitor moves matter.
  • Failing to update: Outdated forecasts are useless. Regular reviews are essential.
  • Relying on one scenario: Always plan for contingencies.

The Strategic Value of Budget Forecasting
Beyond financial control, budget forecasting fosters strategic thinking. It encourages:

  • Data-driven decision-making
  • Agility in uncertain times
  • Improved investor confidence
  • Accountability across departments

It’s not just about numbers—it’s about being proactive, resilient, and competitive.

Final Thoughts
Budget forecasting is not a one-time task; it’s an ongoing discipline that should be baked into your business operations. By forecasting carefully, you can avoid surprises, seize opportunities, and lead with confidence.

Remember: A business without a forecast is like a ship without a compass. Chart your course, check it often, and be ready to adjust with the tides.

Tired of Typing? Use Recurring Transactions In QuickBooks Online

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QuickBooks Online is good at saving you time and keystrokes. Here’s another way it helps avoid duplicate data entry.

Accounting is a repetitive process. As you prepare invoices and receipts and bills, and other sales and purchase forms, you undoubtedly grow weary of typing the same information over and over. Customer and vendor names, addresses, product and service descriptions – you practically memorize these details if you have to enter them frequently.

QuickBooks Online does that memorization for you. Once you’ve entered a detail like a customer’s shipping address or the cost of an item, you never have to supply it again. You only have to select data from lists when you’re creating a purchase order, for example.

But the site goes further. If you have to enter transactions on a regular basis that are identical or nearly identical, QuickBooks Online allows you to save them as recurring templates. When it’s time for them to go out, it gives you options for dispatching them depending on the need for any tweaking. Here’s how it works.

How Do You Make Transactions Recur?

The process is very simple. You start by creating a transaction that you’d like to repeat at intervals you specify. For example, you might send monthly invoices to some customers for lawn services. Enter the invoice details like you normally would, selecting a customer and the item or service descriptions and any other information that needs to be included.

When you’re done, click the Manage icon in the upper right, scroll down in the panel that opens on the right, and click Scheduling, then toggle on the button next to Make invoice recurring. In the Template name field, give it a descriptive name that you’ll associate with the invoice. Then click the down arrow in the field under Type.

QuickBooks Online gives you three options for managing your recurring transactions.

There are three ways you can ensure that the invoice goes out at its specified interval. They are:

● Scheduled. If you select this, your transaction will go out as scheduled with no intervention from you. Only the date will change. We urge caution with this one. Be sure you won’t want to change anything.
● Reminder. QuickBooks Online will send you a reminder ahead of the scheduled date. You can specify how many days ahead you should receive it. Then it’s up to you to make any necessary changes and send it out.
● Unscheduled. QuickBooks Online will do nothing except save your template. You can modify and use this at any time that’s appropriate.

Deal with the other Template options and scroll down to set up intervals and starting/ending dates if necessary. If you choose Unscheduled, you can save the template. For Reminder and Scheduled, though, be sure to complete the fields at the bottom of the pane before saving.

If you’re creating a Scheduled or Reminder invoice template, you’ll need to complete the fields at the bottom of the Recurring settings pane.

NOTE: These instructions are based on QuickBooks Online’s new invoice format. It’s possible that your account is still using the old format. If that’s the case, or if you’re creating another type of transaction that will recur (like a bill) you will see a link at the bottom of the form that says Make recurring. Your other options will remain the same.

How Do You Use Recurring Transactions?

When you want to modify or use a recurring transaction, click the gear icon in the upper right of the page and select Recurring transactions under Lists. A table containing all of the ones you’ve created will open. There are multiple columns in this table that provide a lot of information about each transaction. They are Template Name, Type, Txn (Transaction) Type, Interval, Previous Date, Next Date, Customer/Vendor, and Amount.

● The final column, Action, lists the options you have for each type of recurring transaction. For Unscheduled Invoices, you’ll most likely Use them, though you can also Edit them. If you set up a transaction as a Reminder, you can do the following to it:
● Edit (edit the template, not the transaction)
● Use (opens the original transaction that you can edit, save, and send)
● Duplicate (duplicate the template)
● Pause (stop sending reminders temporarily)
● Skip next date
● Delete

Your time as a business owner is valuable. Don’t waste any of it doing duplicate data entry. Creating recurring transactions in QuickBooks Online is one way of minimizing keystrokes and using the time savings to manage other elements of your business. If you have any questions about what we discussed here or are struggling with any other features in QuickBooks Online, don’t hesitate to contact us to schedule an appointment.

How to Properly Manage Your Business Cash Flow

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Cash flow is the lifeblood of any business. Regardless of how innovative your product is or how many sales you generate, if there’s not enough cash available to cover day-to-day expenses, your business could quickly find itself in trouble. Managing cash flow effectively ensures your company remains financially healthy and resilient during economic ups and downs. Here’s a comprehensive guide to help you properly manage your business cash flow.

1. Understand What Cash Flow Really Means
Cash flow refers to the movement of money in and out of your business. There are two types:

  • Positive Cash Flow: More money is coming in than going out.
  • Negative Cash Flow: More money is leaving than coming in.

While short-term negative cash flow may not be fatal, persistent issues can lead to insolvency. Understanding the timing and sources of cash inflows and outflows is critical.

2. Forecast Your Cash Flow
Creating a cash flow forecast helps anticipate future cash shortages and surpluses. This should be a rolling forecast, updated monthly (or even weekly) to reflect changes in the business environment.

Key components of a forecast include:

  • Projected income (sales, loans, investments)
  • Fixed and variable expenses (rent, utilities, payroll, inventory)
  • One-off expenses (equipment, marketing campaigns)

By forecasting ahead, you can spot potential issues and plan how to deal with them before they become serious problems.

3. Accelerate Receivables
Waiting too long to collect money can starve your business of needed cash. Implement strategies to speed up receivables:

  • Send invoices promptly
  • Offer early payment discounts
  • Use digital invoicing systems
  • Follow up on overdue payments quickly
  • Consider invoice factoring if needed

4. Manage Payables Wisely
While it’s tempting to pay every bill as soon as it arrives, good cash flow management means holding onto cash as long as it makes sense:

  • Take full advantage of supplier payment terms
  • Negotiate better terms when possible
  • Avoid late fees, which can damage supplier relationships

Be strategic: prioritize payments that affect operations (payroll, rent, key suppliers) and delay less critical expenses if needed.

5. Control Inventory Levels
Excess inventory ties up cash that could be used elsewhere. Use inventory management systems to track usage trends and optimize purchasing:

  • Implement just-in-time (JIT) inventory where feasible
  • Identify slow-moving stock and find ways to liquidate it
  • Work with suppliers on flexible ordering

6. Build a Cash Reserve
Having an emergency cash cushion can prevent panic during slow periods. Set aside a percentage of profits each month until you have 3–6 months of operating expenses saved.

7. Monitor and Analyze Cash Flow Regularly
Use accounting software or dashboards to monitor your cash flow in real time. Regularly analyze key metrics like:

  • Operating cash flow
  • Days sales outstanding (DSO)
  • Days payable outstanding (DPO)
  • Cash conversion cycle (CCC)

Reviewing this data will help you spot patterns and make better financial decisions.

8. Cut Unnecessary Costs
Lean operations often translate into stronger cash flow. Audit your expenses regularly:

  • Cancel unused subscriptions
  • Outsource non-core functions
  • Switch to cost-effective suppliers
  • Automate routine tasks to reduce labor costs

9. Secure Financing Before You Need It
If you foresee a future cash gap, explore financing options early while your financials are strong:

  • Business lines of credit
  • Short-term loans
  • Equity investment

Having financing in place can provide a buffer during lean periods without panic borrowing.

10. Educate Your Team
Cash flow isn’t just the finance department’s concern. Train department heads and team leaders on budgeting, purchasing, and financial responsibility. A company-wide culture of financial awareness leads to smarter spending decisions across the board.

Final Thoughts
Properly managing your business’s cash flow isn’t just about survival—it’s about building a strong foundation for sustainable growth. With proactive forecasting, tight control over receivables and payables, strategic spending, and continuous monitoring, your business will be better prepared to weather financial challenges and seize new opportunities.

Remember: Revenue is vanity, profit is sanity, but cash is king. Treat it that way.

Make Sure to Not Claim an Ineligible Dependent on Your Taxes

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Claiming dependents on your tax return can significantly reduce your tax liability through exemptions, deductions, and credits. However, claiming an ineligible dependent—whether accidentally or intentionally—can lead to serious consequences, including IRS penalties, delayed refunds, and even audits. Understanding the rules and repercussions is essential for responsible tax filing.

Who Qualifies as a Dependent?

Before diving into the risks of misclaiming, it’s important to understand the criteria the IRS uses to determine dependent eligibility. There are two main categories:

1. Qualifying Child

Must meet all of the following:

  • Relationship: Your child, stepchild, sibling, or descendant.
  • Age: Under 19, or under 24 if a full-time student (no age limit if permanently disabled).
  • Residency: Lived with you for more than half the year.
  • Support: Did not provide more than half of their own financial support.
  • Filing Status: Not filing a joint return (unless only to claim a refund).

2. Qualifying Relative

Must meet all of the following:

  • Not a qualifying child of another taxpayer.
  • Gross Income: Less than the IRS threshold (e.g., $4,700 in 2023).
  • Support: You provided more than half of their support during the year.
  • Relationship or residency: Related to you or lived with you all year.

Common Mistakes That Lead to Claiming Ineligible Dependents

  • Sharing custody: Divorced or separated parents may both try to claim the same child.
  • Adult children: Claiming a child who earned too much or provided most of their own support.
  • Extended family or roommates: Claiming individuals who don’t meet relationship or residency requirements.
  • Double claiming: Both taxpayers in a split household claim the same person.

Consequences of Claiming an Ineligible Dependent

Delayed or Rejected Refund

If the IRS detects a problem (especially if the dependent’s Social Security Number has already been used), your return may be flagged and your refund delayed or denied.

Amended Returns or Audits

You may be required to file an amended return and repay any credits or refunds you received in error. This can trigger an IRS audit, which may require documentation of eligibility.

Penalties and Interest

The IRS can impose penalties for negligence or fraud, along with interest on unpaid taxes.

Loss of Valuable Tax Credits

Claiming an ineligible dependent may incorrectly qualify you for:

  • Child Tax Credit (CTC)
  • Earned Income Tax Credit (EITC)
  • Dependent Care Credit
  • Head of Household status

If disallowed, you may lose eligibility for these credits for up to 10 years if the IRS deems the claim fraudulent.

What to Do If You’ve Made a Mistake

1. Don’t Ignore IRS Notices

If you receive a notice or letter from the IRS about your dependent claim, respond promptly with any requested documentation or corrections.

2. File an Amended Return

Use Form 1040-X to amend your return if you realize you’ve claimed someone who doesn’t qualify. This can reduce penalties if done proactively.

3. Seek Professional Help

A tax professional can help assess your situation and guide you through rectifying the mistake and dealing with the IRS.

Tips to Avoid Errors

  • Use tax preparation software with dependent eligibility checks.
  • Keep thorough records: proof of residency, school records, income, and support documents.
  • Coordinate with other household members or ex-spouses to avoid duplicate claims.

Final Thoughts

Claiming a dependent can offer significant tax benefits, but the rules are strict and must be followed carefully. If you’re unsure whether someone qualifies, it’s better to double-check than risk penalties or audits. When in doubt, consult a licensed tax professional or the IRS website for guidance.