Looking for a way to make a strong season last the whole year? Steven Palmieri, a Tax CFO, thinks about this with owners in hospitality, catering, tours, events and retail. Their year is uneven by nature, and the books should say so.
In San Antonio, a visitor business has a few big stretches. February brings the Stock Show. April belongs to Fiesta. The holidays fill a calendar of their own. Summer can be slow, since the heat is heavy enough that even the Texas Folklife Festival moved to June to miss the hottest weeks. Revenue arrives in lumps and costs arrive evenly, because rent, staff and insurance do not take the summer off.
That shape is not a flaw. It becomes a problem only when the plan treats every month as if it were the average one.
The first habit is to close each strong month promptly and read it. What did February really bring in, after costs? How much of April's cash was a deposit for an event that happens in May? The books can answer, and the answers drive the next three decisions. How much to set aside as a reserve, how much to put toward estimated taxes, and what the slow months will need.
A strong April is the month to set money aside and a poor month to sign a new lease. Strong cash feels permanent, and a lease is a promise that lasts all year. We help you make the promise only after the summer is covered.
In San Antonio the hotel tax can stack to 17 percent, made of the state's 6, the city's 9 and the county's 2, all gathered through the city. These taxes are collected from guests and owed on a schedule. They sit in the bank for a while, and they look like money you have. They are not yours. We keep them in view as a liability, with the due date next to them, so the cash plan never counts them as spare cash. Every filing date sits on the San Antonio tax calendar.
A busy season means more people for a few months. Payroll for seasonal staff should be set up early on the provider you run, with the registrations done before the first shift. We do not process payroll, and the provider runs payday. We make sure that the seasonal cost shows up in the cash plan in the months it really occurs, so the strong months are not overstated.
Hired in March, working through Fiesta, paid every Friday, and gone by May. A made-up example like that is how we test the plan, with round numbers and no real client behind it.
The slow months are the best time to decide things. A credit line is easier to arrange while statements still show the strong months, and a credit line before you need it explains how. Equipment can be bought when sellers are not busy. Prices can be reviewed when no one is waiting in line. Doing these in the quiet stretch costs less than doing them in a rush, and the books give you the numbers to decide.
Taxes follow the strong months, so the estimate should follow them too. When a big April closes, the quarterly estimate can be set from it, and a reserve can be set aside at the same time. Read more about why cash and profit differ on the page about profit on paper and cash in the mail.
Plan the slow months with your strong ones on a free Second Look call. Cost is zero, and so is paperwork.
You will be talking to the Steven Palmieri practice.