Need a Financial Plan
A great business idea can get you started, but a solid financial plan keeps you going. As an entrepreneur, your success doesn’t just hinge on vision or execution. It also depends on how well you manage your money, forecast future expenses, and align with tax and legal requirements. A financial plan isn’t just helpful – it’s essential.
Key Tax Codes and Forms
- IRC §612 – Gross income from business
- IRC §162 – Business expenses deduction
- IRC §221 and §240 – Interest and investment expenses
- Form 1040 Schedule C – Business income and expenses for sole proprietors
- Form 1120/1120S/1065 – For incorporated businesses or partnerships
- Form 4562 – Depreciation of assets
- Form 1040-ES – Estimated tax payments
Why Financial Planning Matters
- Cash Flow Management
Understand when and where your money is coming from and going. This includes:
- Projecting revenue and expenses
- Tracking accounts receivable/payable
- Ensuring liquidity for daily operations
- Budgeting and Forecasting
Creating a realistic budget helps you:
- Avoid overspending
- Plan hiring, marketing, and investment activities
- Set performance benchmarks
- Tax Planning
Proactive planning helps minimize tax liability:
- Use depreciation strategies
- Time income/expenses efficiently
- Take advantage of tax-advantaged accounts (SEP IRA, 401(k), HSA)
- Compliance and Risk Mitigation
A financial plan ensures you’re aligned with:
- Federal and state tax filings
- Payroll obligations
- Legal structuring (LLC, C-Corp, S-Corp)
- Fundraising and Growth Readiness
Investors and banks expect:
- Clear income projections
- Profitability timelines
- Asset/liability breakdowns
Real-Life Example
Riya launched a sustainable skincare startup in California. Her revenue scaled quickly, but without a financial plan:
- She missed Q2 estimated tax payments and incurred penalties (Form 1040-ES)
- She didn’t account for sales tax, leading to notices from CDTFA
- Investors declined because she lacked financial projections
After working with a CPA, she structured her business as an S-Corp, used Form 1120S, and began tracking all expenses using Schedule C principles. Her profitability rose 18% in the next fiscal year.
Step-by-Step IRS Compliance and Planning Guide
- Set Up Accounting Software
Use tools like QuickBooks, Xero, or Wave to track income and expenses in real time. - Estimate Quarterly Taxes
Use Form 1040-ES to project taxes and avoid penalties. - Choose the Right Entity Type
Work with a CPA to determine if LLC, S-Corp, or C-Corp suits your growth plan. - Track Depreciation
Use Form 4562 for assets like equipment, vehicles, or computers. - Prepare a Forecast Document
Build a 12-month forecast including:
- Revenue goals
- Fixed vs variable costs
- Break-even analysis
Conclusion
Financial planning is more than bookkeeping. It’s about steering your business in the right direction, minimizing surprises, staying compliant, and being ready for growth opportunities. Don’t let a lack of financial clarity be your startup’s downfall.
Call to Action
Anshul Goyal, CPA EA FCA is a U.S.-licensed CPA, Enrolled Agent, and Fellow Chartered Accountant with over a decade of experience helping entrepreneurs build resilient financial systems and stay IRS-compliant.
Book a session with Anshul Goyal today
Disclaimer
This content is for informational purposes only and should not be taken as tax or legal advice. Please consult a licensed CPA for personalized guidance.
Top 5 FAQs
1. Do I need a financial plan if I’m a sole proprietor?
Yes. Even as a sole proprietor, a financial plan helps reduce taxes and improve business stability.
2. How often should I update my plan?
At least once per quarter or when major business changes occur.
3. Can I make a financial plan myself?
You can start one, but involving a CPA ensures accuracy and strategy alignment.
4. What if I’m not profitable yet?
Planning is even more crucial. It helps you identify when and how you can become profitable.
5. Are financial plans required for bank loans or investors?
Yes. Lenders and investors usually require a detailed plan and forecasts.
About Our CPA
Anshul Goyal, CPA EA FCA, is a U.S. Certified Public Accountant, IRS-authorized Enrolled Agent, and Fellow Chartered Accountant with deep expertise in business structuring, IRS compliance, and strategic tax planning for startups and cross-border founders.