Below is a checklist of year end activities for small business owners.
Reconciling your accounts is the process of ensuring that the financial data in your records perfectly matches up with the financial data on your account or bank statement.
This is an essential step for small business owners because without first verifying that all of your financial information is correct, there would be know way of proving the accuracy of your financial statements.
In order to swiftly move from one year to the next, it is imperative that you guarantee the accuracy of your records before moving forward.
Once all of your accounts are correct and error-free, it's time to engage with your accountant or CPA to review your potential tax liability and possible strategies you can use to reduce your tax bill.
An experienced, knowledgeable accountant is absolutely crucial for tax planning as it is their job to stay on top of the the ever-changing tax code.
A stellar accountant will be able to guide you through the tax process as well as advise you on potential tax-saving strategies you can follow to lighten your year-end tax burden.
Financial statements are prepared using the information that was recorded in your books throughout the period and are used to asses your financial performance and position.
The income statement is used to evaluate the performance of your business over a certain period and lists metrics such as income, expenses, and net profit.
The balance sheet is used to give you a snapshot of your financial position, or health, and includes information about your assets, liabilities, and equity.
Put simply, the income statement will show you how much money you made and spent, while the balance sheet will tell you how much you own and how much you owe.
Once you have reviewed your financial statements from the previous year, it is time to create forecasts and attainable goals for the upcoming period.
Without preparing accurate financial statements, there would be no way for the leaders of the company to know if they achieved their goals for the previous period.
It is important to set very specific goals that are also realistic based on the current state of your company.
For instance, all business owners want to "grow profits over the next year", but by how much do you want to grow profits?
You will need to ask yourself: "based on last year's performance, what is a realistic growth rate goal for my company?"
Accounts receivable refers to all the money that is owed to your business but has not been paid out yet.
It is crucial that you, as a small business owner, know exactly how much cash you have outstanding in order to gain a full picture of the true health and performance of your company.
Evaluating your accounts receivable will also give you an idea of which clients have been consistently paying on time and which clients have been consistently late with payment.
Once you have this information, the end of the year is a great time to evaluate which clients are worth sticking with and which are worth dropping based on if they have been paying or not.
Further, creating an accounts receivable report is essential for year end because it gives you a chance to collect on past-due payments and boost your cash position heading into the new year.
Year end is the perfect time to ensure that all of your employee data is up to date and without error.
As a small business owner, it is most likely your responsibility to verify that all employee names, phone numbers, addresses, and other important information is correct and up to date so that you don't run into any payroll issues to start the new year.
Similar to updating employee information, it is vital to ensure that you have all of the correct contact information for your most trusted vendors.
Year end is a great time to go through your accounts to ensure that all of your suppliers' information is correct and up to date within your system.
Since so much of today's business world operates solely online and through cloud solutions, it is highly important that you keep your most crucial data properly stored and protected.
Generally, it is best practice to backup your data at least once each month, however year-end is also a great time to ensure the proper protection of your most important data.
Once you have collected and organized all of your financial data for the year, it will be easy for you to judge how your marketing efforts performed throughout the period.
Since the world is always changing, so should your marketing strategy. At the end of each year you should be diving deep into what worked well for you in the past, what hasn't been working so well, and what new technology/marketing methods exist now that didn't exist last year.
Staying on top of your marketing data as well as the top trends in your industry will put you in a great spot moving into the new year with an updated marketing plan based on past evidence and data.
As a small business owner, you worked really hard to get to where you are now and it's important to appreciate and celebrate that.
Year end is a fantastic time to reflect on your past achievements, celebrate all the wins, and congratulate one and other for another great year in business.
You can also use this celebration to boost morale throughout the company by showcasing employees that have contributed a lot, or records that have been broken thanks to the hard work of a certain team.
This is your chance to reflect and enjoy all the hard work you and your team put in to get where you are today.
Running a small business can be extremely challenging at times, and especially challenging at the end of a busy year.
However, when you have accurate financial data to review past performance and set expectations for the future, you will gain a better understanding of your company's financial position moving into the new period.
Once you have analyzed your financials, it is helpful to ensure that all employee and vendor information is properly recorded within your system to avoid any issues down the road, as well as creating a backup of your most crucial data.
Next, you should audit your previous marketing strategy to identify your strengths and weakness, which can be used to create your new strategy for the upcoming year.
Finally, you should celebrate all of the wins you experienced throughout the year and reflect on how far you have come.
Noon Bookkeeping is an outsourced bookkeeping and accounting solution for business owners consisting of a team of CPA's and certified, expert bookkeepers ready to help you organize the finances of your business.
Noon can handle all of your bookkeeping in one place so that you can focus on running and growing your unique business knowing that we’ve got your finances handled.
Learn more about how Noon can help you take control of your finances.
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