Essential End of Year check list for businesses of all sizes
With the year ending, now is the ideal time for small business owners to take stock. Completing the following small business end-of-year checklist will keep you on track and ensure you don’t miss performing any vital company tasks. Then you can enjoy the end-of-year festivities and get the new year off to a prosperous start.
Wrap Up Your Bookkeeping
As the year winds down, take the time to close out the books for 2022 in preparation for the next tax season. Run your financial reports to evaluate the past year’s revenue and determine if your company is on track.
Calculating this financial data with bookkeeping software will give you the necessary information to shift focus if required. For example, if you are close to your year’s revenue goals, you can ramp up efforts and push to the finish line.
Financial information can also help you adjust your goals if your income’s lagging. You’ll also be able to set more realistic objectives for the new year. And if you’re on target, you’ll have something to celebrate at the end of the year.
Essential EOY Financial Reports to Run
Several EOY financial reports will give you an accurate overview of how well your company is doing. The following financial records provide an accurate view of your company’s fiscal health.
Your profit & loss statement, also called an income statement, will give you a bird’s-eye view of your profits to date. Of all financial reports, this document is one of the most useful for gauging how well your company has done over the previous year. The P&L also provides valuable data regarding your company’s performance in the coming year.
If profits are as high for this past year, you’ll likely want to continue on the same course. But suppose your profits are lower than expected. In that case, this is an excellent time to analyze where your company faltered so that you can make some changes. Cash flow statements can help show you where dips in revenue occurred.
Check out Accounts Receivable
Accounts receivable is another vital document to examine this time of year. The amount your customers owe you for work completed allows you to calculate your accounts receivable turnover ratio. This figure indicates how efficiently your business can collect revenue. If the ratio is high, your customers are paying on time. But if the ratio is low, you have payments due lingering too long. The end of the year is the perfect time to collect past-due payments so you can start the new year strong.
Analyze Business Expenses
Accounts payable is another indicator of the financial health of your company. Take a close look at the business expenses for the year and start reconciling items on your balance sheet. When doing so, determine what expenses were worthwhile and what expenses may have been excessive. Use this information to create a budget for the coming year and an action plan for becoming more profitable.
Conduct an Inventory
If you have a physical inventory, now is a good time to do an inventory to determine what products were popular over the last year. Conducting an inventory is also required for tax season. You may find that you have excess slow-moving inventory. Consider asking your supplier if you can return the merchandise in exchange for more popular items.
Check In with Vendors
Ensure that your vendor and supplier information is accurate and up to date. While doing so, discuss opportunities to negotiate better deals next year. Also, check that there are no upcoming supply chain issues with the products you require to run your business. If there are potential shortages on the horizon, look for additional suppliers to fill in the gaps. Also, make sure to clean up your records and purge your system of inactive vendors.
Perform a Website Audit
Chances are your website is working hard for your company. Before the year closes, do an audit to ensure your site is operating up to capacity. Check the page load speed and page performance. Also, look for and fix any broken links. Now’s the time to redesign your website if it’s been on your mind.
Update Payroll and Employee Information
The lead-up to the end of the year is the perfect time to ensure that all employee data is accurate and up to date. Check contact information and payroll data. Verify that any taxable benefits, such as unused sick pay, are on the books for payment. Inform employees of any end-of-year deadlines they must adhere to. Also, take this time to ensure that employee benefits packages are competitive.
Plan and Perform Annual Employee Reviews
Many employees appreciate knowing how well they have done over the prior year. Plan to sit down with your workers to review their performances. If you are paying out bonuses, inform employees during their annual reviews.
Considering Staffing Needs for Next Year
With the year winding to a close, examine staffing requirements for 2023. During the last year, were you short-staffed regularly? Or perhaps business slowed, and you’ve been overstaffed? Sit down now and forecast your upcoming staffing needs. If you require more employees but the budget is limited, consider hiring seasonal workers or interns. If you lack work for employees, try cutting back on hours or rearranging schedules.
Review Insurance Policies
It’s good practice to complete an annual review of your company’s insurance policies. Ensure that your current coverage is adequate for your business as it stands today. If you need more property or liability insurance, now is the time to update your policies. You could also find that you are over-insured. In that case, you can save money by reducing coverage.
Gather Tax Documents
The end of the year may not be tax season, but the time to file and pay Uncle Sam will soon be here. Gather all your necessary tax information as you close out your books for the year. When Tax Day rolls around, you’ll be glad you began the process. Collecting tax information at year-end for your CPA can also give you an idea of your company’s tax liability. You’ll be able to plan and budget for taxes more efficiently.
Reflect on Last Year Business Success
The end of the year is a natural time to look back over the prior year to assess how well your company has done. In addition to financial goals, consider if your company accomplished production objectives. If you intended to grow your customer base by 30 percent this year, did you reach your goal? Or perhaps you plan to expand into other markets? Did that occur?
While reflecting on the prior year and its successes, congratulate yourself and your employees for the accomplishments. If possible, take the time to celebrate, such as by holding a company holiday season party. Celebrating will enhance camaraderie amongst employees and motivate your team to start strong in the new year. Also, use this time to recognize those employees who went above and beyond over the past year.
Plan 2023 Business Goals
It’s never too early to decide what mountains you want to scale with your company in the coming year. Now that you’ve assessed the prior year, set goals for next year. While doing so, it also determines how you will reach those goals.
Maybe you’ve reached a point where it’s time to investigate accounting software to help your financial goals, or perhaps you’ve found that you want to expand your marketing efforts and enter the world of social media. Use lessons learned over the prior year to guide you in business planning toward achieving even more objectives in 2023.
Incorporate Your DBA
Start the year out fresh with new benefits on your tax return come tax time by incorporating your DBA now. With the help of business formation experts like law firms, you can quickly and easily turn your DBA into an LLC.
Complete Company Dissolution
If you’ve decided to dissolve your company, year-end is the ideal time. Wait until the new year, and you will likely incur additional charges and liabilities. It’s generally best to complete the dissolution process of your business before the end of the year.
AND, FAIR WARNING:
ALWAYS WORK WITH A RELIABLE, DEPENDABLE, KNOWLEDGABLE, SMART CPA.
STAY AWAY FROM NOVICES TO SAVE FEW BUCKS! YOU WILL PAY A WHOLE LOT MORE AT THE END! GUARANTEED.