Jim Atwood Headshot By Jim Atwood

As the year comes to a close, now is the time for death care professionals to examine their business and prepare for financial success in 2015. For many, reflecting on a business’s progress and developing a year-end financial review can appear to be a complicated and intimidating process. This reality coupled with the holiday season often leads to procrastination.

While there are many components to a year-end financial review, there are four key areas that are vital to a funeral home, cemetery or trustee’s financial success in the coming year.

A Year In Review
To establish sound business objectives and develop an effective strategy to meet these goals, it is paramount that death care professionals arm themselves with the information they need to make well-informed business decisions. Gather and review data about profits, expenses, business accounts and cash flow. Dive into these numbers to measure this year’s fiscal performance.

Ask the following:

• Did the business perform as projected?

• What triumphs and setbacks did your funeral home or
cemetery experience in 2014?

• What can be done to maintain or achieve greater financial
success in 2015?

By answering these questions when analyzing the bottom line, you will uncover opportunities for improvement. Often in the death care profession, modest profit margins are tied to high general overhead costs or out of date business models. To combat these challenges, funeral directors and cemeterians should honestly evaluate their operation and determine if they need to consider redesigning their model to streamline spending and enhance productivity.

Tax Planning
Tax planning is critical to developing a successful financial plan. After taking an in-depth look at your business and ensuring your financial records are in order, schedule an appointment with your CPA. Ask questions and be prepared to discuss:

• Tax law changes or updates

• Reporting deadlines and requirements

• Estimated tax payments

• Strategies to minimize taxes due

With your CPA, consider whether various tax planning strategies can help you meet your financial goals and maximize tax deductions. These strategies should take into account your tax bracket, business structure and the state in which your business operates, and vary based on your accounting method (cash verses accrual basis). You may want to consider taking on additional expenses to minimize the amount owed in April. If you project a higher net income in 2015, however, it would be wise to defer added expenses until the new year.

Investment Analysis
Now is the time to analyze your investments whether you place funds in preneed, merchandise, care and maintenance trusts, or another investment vehicle. To understand how your investments are progressing, compare this year and last year’s performance. Schedule an appointment with your financial advisor, trustee and investment manager.

Ask your trustee, investment manager and/or financial advisor to provide the following:

• Rates of return

• Comparison of investments’ performance
to widely known benchmark such as
Standard & Poor’s 500 index

• Trust expenses

• Investment changes

When building a financial strategy for 2015, it is important to revisit your investment policy statement – the guidelines that outline investment objectives and strategies. With your trustee, discuss how the IPS supports your financial objectives.

Planning for Preneed
While some states begin preneed licensure renewals later in the year, many states require death care professionals to provide preneed contract information for licensure renewals in the first quarter. Regardless of the deadline, renewal requires death care professionals to submit information from the 2014 calendar year. Therefore, avoid procrastinating and begin planning for the preneed licensure renewal process with these tips:

• Ensure that you know your state’s exact
deadlines, what information or reports
are required, and the level of detail you
needed about preneed contract and
trust activities.

• Gather and prepare the necessary
financial information for both state
regulators and the IRS

• Process any pending withdrawals of
funds from preneed contracts
Information about preneed contracts, along with other 2014 tax information, may be needed for reporting to the IRS. Due to the significant amount of information required for both types of reporting, death care professionals should begin this process before the year-end.

By focusing on these areas, death care professionals are able to take a step back and look at the big picture. This is important for developing a sound financial plan for your business – positioning a funeral home or cemetery for success in 2015. To borrow a quote from baseball great Yogi Berra, “If you don’t know where you are going, you’ll end up someplace else.” FBA

Jim Atwood is CEO of Infinity Management Advisors, LLC, a consulting firm that specializes in fiduciary administration and services. Prior to forming IMA, Mr. Atwood held numerous management roles in the banking profession, providing administrative, fiduciary and consultative services to the cemetery and funeral industry. He received his Juris Doctorate from the Nashville School of Law and is a graduate of the American Bankers Association Trust School and Graduate Trust School Programs. To reach Jim, email [email protected] or visit trustima.com.