By far the least glamorous part of owning and operating a business is a year-end procedure but it’s quintessential. I compiled a list of the top 5 things every small business owner should do at the end of every year. Use this checklist as a guide and customize it for your business. Alright, let’s go!
1. Get your Books in Order, then Run Financial Reports
Before you run financial reports, be sure your financial records are current. It doesn’t matter if you have a folder of receipts or an accountant – you must do this before you do anything else. I am a huge fan of QuickBooks, but any cloud-based accounting software will streamline this process plus your accountant has direct access to your business records online.
In the spirit of being sure your books are up to date, try to reconcile your accounts receivable. If you are a service-based business, you should have a running list of what invoices are unpaid. Try to collect those payments before the end of the year – this will improve your cash flow and a fresh start to the new year.
Once your bookkeeping is complete, use your accounting software to generate: (1) profit and loss statement, (2) balance sheet; and (3) cash flow statement. These reports will allow you to review and assess whether you met your financial goals – specifically your profit and loss report. This is the best way to tell where your business stands financially.
2. Prepare for Taxes.
I wouldn’t be a lawyer if I did not lead with a disclaimer… I am not a tax professional and you should always consult a CPA for your tax needs. As general guidance, if you have contractors or vendors, you need current W9s on file. A W-9 includes all of the vendor information you need so their 1099 can be filled completely and correctly. If you are a vendor, be sure you send an updated W-9 to your clients, so they have what they need to file as well.
So what’s the deal with 1099s? The “general rule” is that business owners must issue a Form 1099-MISC to each person or entity to whom you have paid at least $600 in rents, services (including parts and materials), prizes and awards, or any other income payments. Consult your accountant to be sure this is done correctly.
3. Evaluate Your Goals, then Create New Ones
Business evaluation can start as a lofty exercise, so I suggest starting with what you KNOW you have done this year. Create a list of the accomplishments the business made this year. Record-breaking sales? Streamlined client intake? Top performing employees/contractors? Whatever it is, write it down.
Next, evaluate your goals from last year. Pull out your business plan, accomplishment list, financial reports, and compare them to the goals you set for the year.
● Did you accomplish what you set out for the year? Why/Why not? Has your market changed? Are consumers/clients shopping differently?
● What do you want to do better?
● What do you want to do more/less of?
● What is costing (financial or time) your business more profitable? How do you fix it?
● When you establish your goals for the next 12 months, your staffing needs should be part of that discussion. Could you have made more money if you had an extra hand or two?
Use these notes to help you with your business plan and goals for next year. It is not enough to state “increase revenue”. How much do you want to increase revenue? How will you increase revenue by 20%? Will it require more advertising? More employees? Develop an action plan so the goal is achievable.
4. Back that Thang Up — your data that is.
Back up all of your files, including accounting, client files, contacts, notes, and emails. If you don’t have one already, invest in an external hard drive or a cloud-based system. Data security is critical to a business so be sure your data is safe.
5. Audit your Website and Social Branding
Your website and social media are a living marketing tool. Review it to be sure links are still active and contact information is correct. Your website should grow with your business. Should you make updates to scale for your next year’s goals? Are you engaging your followers to understand their consumer needs? How can you profit from them?
You are encouraged to use this checklist to benefit your business and profits.
