The end of the year is a busy time for a whole host of reasons. Holidays, travel plans and family visits keep us all running ragged from November through January 1. But as a small business owner, there’s even more you have to handle at the end of the year.
Right now is the time of year when your business really needs your attention, especially in regard to accounting, IT and end-of-year administrative tasks. Doing so not only helps you close out the current year on a high note, but it also sets you up for starting off the next year on the right foot.
Here’s what you need to do for your small business before the end of the year.
This is where you spend the bulk of your time at year’s end to get your business in order. Managing your financial records is critical throughout the year, but even more so in December. By maintaining excellent records and keeping them in order, you’ll help yourself and your accountant (if you have one) when tax time rolls around.
1. Run a Few Standard Reports
Take this the time of year to assess where you stand financially and how that compares to previous years. Using your accounting software or looking through spreadsheets or other records you keep, you want to generate a complete financial report, which typically consists of a profit and loss statement, a balance sheet and your cash flow statement.
Your profit and loss report is key. This is the best way to tell where your business stands financially and what your outlook is like for next year. You also want to look at your profits for the year. Is it larger than expected? If so, it might be a good time to make some larger purchases for which you can record future depreciation.
Talk with your accountant first to make sure you have the cash on hand to make the purchase, and make sure you fully understand depreciation rules.
2. Analyze Your Cash Flow Statements
- Cash flow from operating activities (i.e. revenue and expenses)
- Cash flow from investing activities (i.e. assets purchased and assets sold)
- Cash flow from financial activities (i.e. loans and repayments)
3. Verify Your Vendor Information
Take a look at all of your vendors in your system, and verify that the contact information, including phone number, email address and contact name are still correct. Also, purge the system of any inactive vendors or inaccurate information. Or if time permits, evaluate whether or not they’re worth reconnecting with, and act accordingly.
4. Reconcile Accounts Receivable
You should have a running list of what invoices are still unpaid or which clients still owe you money for work already completed. If possible, chase these outstanding bills and try to collect before the end of the year. This will help with cash flow and give you a clean start for the new year.
5. Double-Check Your Payroll and Benefits
It’s better to stay on top of any issues or corrections that need to be made to your payroll before year’s end. Ensure that taxable fringe benefits, such as third-party sick pay or a company car are accounted for. Other benefits that are easy to forget include educational reimbursement, health and life insurance, and transportation subsidies.
Information Technology (IT)
1. Back Up Your Data
Make sure that all of your files, including accounting, client files, creative briefs and emails are backed up and secure. You also want to do the same for your employees. Provide them with external hard drives or access to a cloud-based system so that you can ensure your data is safe.
2. Back Up Your Contacts
Whether you do most of your business over the phone or via email, make sure to back up all of your contacts, even if that means writing them down in an old-fashioned Rolodex.
3. Download Any Files or Reports
If you’ve kept some documents or reports only on a cloud-based system like Dropbox, or if you’ve only saved generated reports within the system that created them (i.e. QuickBooks), take a moment to download copies of all of these and back them up with everything else. The golden rule for data backup is 2:1. That is, create two separate digital copies, stored in two separate locations, plus one offline copy (preferably stored somewhere else).
4. Evaluate Your File-Naming Conventions, and Adjust as Necessary
If you don’t have a file-naming system that is company-wide, seriously consider implementing one. For example, if you manually save receipts as Word documents, you might adopt a convention like “LastName-Date-InvoiceNumber,” or something similar.
Adopting file-naming conventions is especially important for businesses that share servers that can be accessed by multiple employees. Take a look at any of your own files that need to be backed up, and make sure you’ve named them appropriately. Change file names now to be clearer so that you’re not stuck searching for something come next June.
1. Determine If You Will Offer a Bonus or Other End-of-Year Incentive
It makes a difference whether you disburse bonuses or other rewards before the end of the year or in January, especially for your taxes, as it directly impacts the profits you report.
2. Examine Your Staffing Needs for the Coming Year
3. Collect a List of Your Business’ Accomplishments for the Previous Year, and Share It
Your employees will appreciate hearing all of the things that your company has accomplished over the past 12 months. This is also a great time of year to recognize any outstanding performers.
1. Conduct an Inventory Count
If you keep product or materials in a warehouse or on-site, conduct an inventory count before the year’s end, and make any corrections to your current records. If you notice significant discrepancies, it might be a good idea to investigate. You want to be sure that not only are you keeping accurate records, but that you’re not experiencing any internal loss.
2. Examine Your Goals, and Make New Ones
Using your financial statements, customer feedback and input from your team, assess your goals for the previous year and determine how well you did. Did you achieve what you set out to do? Or did you find yourself taking an unexpected path to a different kind of success?
With the learnings from the previous year in mind, set goals for the coming year. Financial goals should be a given, but make room to evaluate professional and client goals too.