The holiday season is always a hectic time for small business owners , but before January rolls around there are important housekeeping items to attend to. This quick primer breaks down what your year-end checklist should include so it’s business as usual come the new year:
1. Compile key documents
As the year comes to a close, it’s a good time to gauge your business’s financial health. Organizing and updating some basic documents can tell you where your business stands. Here are three key documents to focus on:
- Profit and loss statement: Summarizes your revenues and expenses over a specific time period.
- Cash flow statement: A record of cash intake and outflow for your business.
- Balance sheet: Outlines your business assets, liabilities and equity.
Together, these documents should give you a balanced snapshot of how well your business is doing and what trouble spots you may need to address.
2. Review accounts, payable and receivable
Once you’ve run some basic reports, the next step is tying up loose ends with vendors and/or contractors. Look for any invoices that need to be paid and check your bank account to make sure that you have the funds to pay them. If not, reach out to vendors to see if it’s possible to extend your payment dates.
From there, review accounts receivable to determine if there are any payments owed to you. Send reminders to customers or anyone else who has an outstanding invoice. Check for accounts that are significantly past due and consider whether you’ll initiate collection actions or write them off as a loss on your taxes.
3. Prepare your final quarterly tax payment for the year
January 15th is the deadline for filing your last quarterly tax payment for the year. That payment is based on earnings from September 1 through December 31. Underpaying quarterly taxes or paying them past the due date can trigger penalties and interest so it’s a good idea to figure out what you’ll owe sooner rather than later.
4. Organize payroll
If your business has employees, you’ll want to review and update your payroll records before the year is out. Make sure you’re withholding and reporting Social Security, Medicare, income and disability taxes accordingly so that you can process employee W-2 forms on time. You should also decide whether you’re going to give bonuses to your staff, what form they’ll take and when you’ll hand those out since that can affect your tax filing for the year.
5. Track your inventory
Keeping tabs on inventory is important because lost inventory means lost profits for your business. If you run a retail store or a service-based business such as a salon, for example, you’d want to spend some time doing a thorough inventory count to see if it matches up with your sales records. While you’re at it, look for items that may need to be marked down or written off because they’re not selling well or they’ve exceed their sell-by date.
6. Review your insurance coverage
Insurance is designed to protect your small business from losses associated with liability claims or physical damage to your premises, inventory and business vehicles. Take a glance at your policy to see if there are any gaps in your coverage. Review your coverage limits and deductibles to see if those need to be adjusted. For example, you may need to increase your coverage if you recently invested in an expensive piece of equipment.
7. Update your goals
Setting annual goals for your business gives you a road map of what you need to work towards over the next 12 months. Look back at what your business has done over the last year and think about what it is you’d like to achieve going forward. Use that as a template for creating a list of goals for the new year. Be specific and include actionable steps whenever possible so you have a clear-cut plan for taking your business where you want it to go.
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