Another new year is on the horizon, and along with finishing up your holiday shopping and making plans for next year, there are a few final accounting tasks you need to do for your business’s financial health.
It can be tough to find time to fit in these important year-end financial tasks, but they’re critical when it comes to preparing for tax season. Set aside some time in the next few weeks to pour yourself a glass of eggnog and take care of these important financial tasks.
Here’s the checklist to get you started.
Get your books in order
It can be easy to let small accounting tasks pile up, particularly during the busy holiday season. Before the end of the year, take the time to get your books in order. Not only is this a critical first step for taxes and planning, it also helps you start the new year with a clean slate.
Sort through your boxes full of receipts, reconcile your accounting software, follow up on invoices, catch up on bills, and make sure that everything is ready to go.
Run the standard reports
Get more insight into your business finances for last year by running the standard reports and comparing them to previous years. If you use accounting software like QuickBooks Online, Sage One, or Xero, it’s simple to pull those reports out of your program. Or, talk to your accountant and have them run those reports for you.
Standard year-end reports to run include:
Profit and loss report
Cash flow statement
Net profit margin over time
The year-end is a great time to spend money and reduce your tax liability. Often, these expenses need to happen anyway, and timing them at the year’s end can help you make the smartest decision about what to spend and where.
Make purchases for your business to upgrade your equipment, stock up on office supplies, or make other business investments. This is also a great time of year to donate to a charitable cause, whether in a dollar amount or items such as clothing, furniture, and other goods. And if you haven’t maximized your retirement account, be sure to do that before the end of the year.
Check with an accountant about year-end tax strategies
There are several ways to save money on taxes at the end of the year, whether that means reevaluating your business structure, taking advantage of your business’s depreciation claims, or maximizing your deductions as we just mentioned.
Talk with your accountant or financial planner to get the best advice about year-end tax strategies for your individual business circumstances. This can be especially helpful if your accountant works with other businesses similar to yours, as they can advise you about strategies their other clients have tried.
Evaluate your business goals
Many people take time at the end of the year for a personal reflection. But it’s also a perfect time to reflect on your business. What went well last year? What missteps can you learn from? Taking a good look at your financial statements and reports can tell you how well you did in meeting last year’s goals, and help you shape your goals for next year.
What kind of potential growth is possible, and what sorts of changes will you need to make to get there? Evaluate your pricing strategy, your costs, and investments. Oftentimes, the numbers will give you important insight into where you can make changes to improve your profits and grow your business. Sit down with your team or financial advisor to come up with a solid financial strategy for next year
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