Halfway through 2026, your numbers probably don’t look exactly like the plan you wrote in January. That’s how it goes for most owners. The thing that catches people out is reaching December without ever checking in between.
The mid-year financial check-in is one of the more useful moments in the business calendar. You’ve got six months of real data behind you, and there’s still six months ahead to use it.
What follows is a quick checklist of seven things worth looking at before July 1. None of them takes long. Each one tells you something useful and points to a move you can make in the second half. You can work through the whole list in an afternoon.
1. Pull Your YTD P&L and Compare It to January’s Plan
Open your profit and loss for January 1 through May 31, and put it next to whatever revenue and expense targets you set in January.
The point of the comparison isn’t to feel good or bad about the variance. It’s to sort out which gaps are permanent and which are just timing.
If you’re running 10% or more below plan on revenue, the question worth asking is whether H2 can realistically close the gap. Your pipeline will tell you more about that than your past sales will. If you’re ahead on revenue but flat or down on profit, something’s leaking somewhere, usually in labor, cost of goods, or owner compensation that scaled faster than the business model supports. Walking the P&L line by line is usually enough to find it.
Per the Federal Reserve’s Small Business Credit Survey, a meaningful share of small employer firms come in below their revenue expectations in any given year. The point of the mid-year check is that there’s still time to adjust without it becoming a year-end problem.
2. Build a 12-Week Cash Forecast Today
Your bank balance today is less useful than knowing what your balance will look like in eight weeks.
A 12-week cash forecast is straightforward to build, even on a notepad if that’s easier. List your expected weekly inflows (customer payments, retainers, deposits coming in) against your expected weekly outflows (payroll, rent, vendors, estimated taxes, debt service, owner draws). Project 12 weeks forward. The difference is your week-by-week projected cash balance.
If at any point in those 12 weeks the projected balance dips below four weeks of operating expenses, that’s your early warning. You’ve got time to nudge collections, push a vendor payment a week, or trim a fixed cost before the dip actually arrives.
The JPMorgan Chase Institute found the median small business holds about 27 cash buffer days, which is one slow-paying customer away from a real problem. The forecast is what tells you whether that’s where you’re sitting.
3. Recalibrate Your Q2 Estimated Tax Payment Before June 15
Q2 estimated taxes are due Monday, June 15. A lot of owners just repeat whatever Q1 was and call it done, which usually works out close enough, but sometimes leaves real money on the table. It’s worth the few extra minutes to recalculate from your actual YTD figures instead.
Pull your net profit through May, apply your estimated effective tax rate, and subtract what you already paid in Q1. That gives you your Q2 number.
The IRS safe-harbor rule keeps you out of underpayment penalty territory if you pay 100% of last year’s total tax (or 110% if your prior-year AGI was over $150,000), or 90% of this year’s actual. So if your revenue is well ahead of last year, last year’s quarterly figure is going to leave you short and stack interest on top. If you’re tracking behind last year, you might be overpaying and tying up cash you could put somewhere more useful. Either way, the five minutes it takes to recalculate beats finding out in April.
4. Have Your Fixed Costs Crept Up Without You Noticing?
Fixed costs are the quiet margin killer.
These are the costs that don’t move with revenue: rent, salaries, software subscriptions, insurance, debt service. They tend to creep up invisibly between January and June. One new tool added here, one staffing upgrade made there, a lease renegotiated up at renewal.
The general target for most service businesses is keeping fixed costs under about 60% to 65% of revenue. Pull a list of every monthly fixed-cost line, add them up, and divide by your average monthly revenue.
If you’re past that threshold, your breakeven has moved up, and every new dollar of revenue is thinner than it looks on the surface. Mid-year is a good moment to take your three biggest fixed-cost lines and put each one on the table: is there a version of this that’s renegotiated, eliminated, or shifted to variable? You don’t have to act on all three. The question is what creates the option in the second half.
5. Match Your Owner Pay to Your Cash, Not Your P&L
Owner compensation is one of the most common places where things quietly drift between January and June.
For S-corp owners, the IRS requires a reasonable salary before you take distributions, and what counts as reasonable shifts as the business grows. If your revenue is up 25% from last year but your salary hasn’t moved, that’s worth a look, both for compliance and for retirement contribution planning.
For owners taking draws from a pass-through, the most common cause of the August-to-September cash crunch is draws taken against paper profit instead of actual cash. The P&L looks great. The bank account doesn’t.
The cleaner approach is to set a fixed monthly owner draw based on what your 12-week cash forecast actually supports, and run it the same way you’d run payroll. It’s a small structural change that tends to take a lot of the stress out of summer cash.
6. Make the Q3 Decisions That Lock In Q4
The decisions that move the needle on your 2026 tax return aren’t made in April of 2027. They’re made between July and September.
Equipment, vehicle, and software purchases need to be placed in service this tax year to generate the Section 179 or bonus depreciation deduction. Solo 401(k) plans need to be opened by December 31, though contributions can follow up to your filing deadline. Entity changes (an LLC electing S-corp treatment for 2027, for example) need to be filed in time to take effect for the next calendar year. Hiring decisions made in Q3 set the payroll tax structure for the back half of the year.
It’s worth blocking 30 minutes on your calendar in July to walk through which of these are on your radar for 2026. Once October hits, your options narrow fast, and the conversations tend to be more expensive when they’re rushed.
7. Is Your Accounting Setup Actually Giving You These Numbers?
If working through the first six felt harder than it should have, that’s the real signal worth paying attention to.
Books should be closed by the 10th of every month. Every monthly close should produce three things you can actually use: a current profit and loss, a cash position, and an AR aging report. Not just a folder of receipts and a software login.
If pulling any of those took longer than it should have, the conversation worth having isn’t about whichever number above looked worst. That number is just a symptom. The reporting cadence underneath it is what’s actually going on, and that’s the piece worth fixing first.
Work through these seven in the next couple of weeks. If something looks off, that’s exactly what the mid-year is for. You’ve still got six months to actually do something about it before December locks the year in.
If you’d like a second set of eyes on your numbers before the second half kicks off, two easy ways in:
1. Take the Financial Health Assessment, our 20-question diagnostic across Accounting, Tax, and CFO. You’ll get a written read on where you stand.
2. Book a discovery call with Victoria. 20 minutes, no obligation, just a real conversation about your numbers.
Common Questions
What is what’s still 100% deductible?
You can still write off the full cost of certain meals, and these are worth prioritizing in your budget.
What is what’s 50% deductible?
Most business meals with clients or customers remain 50% deductible, and this is where most small business owners will find their opportunities.
What is what’s not deductible anymore?
Entertainment expenses have been nondeductible since the 2017 Tax Cuts and Jobs Act, and that hasn’t changed. Sporting events, golf outings, theater tickets, and concerts are 100% nondeductible even if there’s a clear business purpose.
How do you Document Everything?
The IRS requires you to keep detailed records for all deductible meals. Missing or incomplete documentation can result in denied deductions, plus tax, penalties, and interest during an audit.
What to Do Before Year-End?
If you’ve been relying on employee meal deductions as part of your tax strategy, now’s the time to reassess your budget and benefits structure.
