For many business owners, tax season is stressful—especially if accounting isn’t your strong suit. Organizing financial records can be complicated and overwhelming. That’s why maintaining a clear, year-round record of your funeral business’s financial health is crucial.
Accurate tax returns not only keep you compliant with the IRS but also position your business for growth, investment, or even a future sale. Here’s why staying on top of your funeral business’s finances should be a top priority.
Avoid IRS Audits
If the IRS detects discrepancies in your tax returns, they may initiate an audit. While audits aren’t necessarily a sign of wrongdoing, they can be time-consuming and potentially costly.
An IRS audit is a deep dive into your financial records to verify accuracy and ensure compliance with tax laws. Common audit triggers include:
- Unreported income
- Excessive deductions
- Repeated losses
- Significant discrepancies in reported figures
Audits come in different forms, from simple information requests to in-person office meetings or even on-site evaluations. In any case, you’ll need to provide precise documentation to support your tax filings—failure to do so can lead to penalties.
Plan for the Future
Many funeral home owners have a general sense of their revenue but lack a clear understanding of their profitability. Keeping detailed financial records helps you make informed business decisions, whether you plan to expand, streamline operations, or eventually exit the business.
For example, analyzing your financials might reveal that your average sale is declining and your labor expense percentage is too high (or possibly too low). A well-documented financial history gives you the insights needed to adjust your business strategy and improve long-term success.
Prepare for a Sale
If selling your funeral home is in your future, potential buyers will want a transparent look at your financial history. Expect to provide:
- Profit and loss statements (last 3 years)
- Current balance sheets
- Business tax returns (last 2-3 years)
- A detailed list of assets
A professional business valuation also requires up-to-date and accurate financial records. If you haven’t been keeping meticulous records, now is the time to start. Johnson Consulting Group has the experience and resources to establish exactly how much your business is worth and what it takes to increase the overall value.
Secure Financing for Expansion
Looking to open additional locations or add new services like cremation? You’ll need reliable financial records to secure funding. Lenders, like the Small Business Administration (SBA), typically require:
- Business and personal tax returns
- Profit and loss statements
- Balance sheets
- A business plan with financial projections
Lenders want to see a clear financial picture before approving loans, making accurate record-keeping essential for securing capital. Johnson Consulting Group works closely with a trusted network of banks that are familiar with the funeral profession to secure business loans at the best terms.
Stay in Control of Your Business
Understanding your funeral business’s financial health is key to making smart decisions. Whether you’re planning for growth, attracting investors, or staying IRS-compliant, having organized and accurate financial records is non-negotiable. Training your team and surveying your families goes hand and hand with financial diligence. A consultant can strengthen your team’s customer experience leading to higher online reviews positively impacting your sales. No matter where you are in your business lifecycle, keeping a pulse on your financials, benchmarking your team, and providing exceptional customer service is imperative to your success.
That’s where Johnson Consulting Group comes in. Their team specializes in funeral industry accounting, offering expert insights tailored to the unique financial needs of death care businesses. From tracking profits and losses to setting budgets and preparing for future goals with a 13-week cash flow analysis, their accountants help ensure your funeral business stays financially sound.
Don’t wait until tax season—start optimizing your financial records today.
CORRECT YOUR FUNERAL HOME FINANCES