Time flies when you’re having fun, but it might fly even faster when you’re running your own small business.
The new year is fast approaching, signifying a time to set personal goals, make improvements to your life, and focus on the future. But the new year is also a time when you want to look ahead at where your business will be going and the goals you wish to achieve in the new year.
And what’s the best way to set goals for your business and make improvements with a focus on the future?
By getting your accounting in order, of course!
Proper accounting is the foundation of any successful business, so whether you work with a CPA, a bookkeeper, or DIY, this year-end checklist will help you get your accounting in order so you will be all set for the next twelve months!
1. Review Your Profit & Loss Statements
Number one on your list of things to do before the end of the year is to review your profit and loss statement.
Why? Because it’s a helpful reminder about how your company is spending money. Doing a check now will also ensure that all your expenses are categorized, making it much easier to reference them in the new year.
It’s also a good idea to go back over your Profit and Loss Statement one more time after you reconcile your bank accounts, receipts, and other potential concerns.
Pro Tip: Accounting software such as QuickBooks will sync directly with your bank account or credit card statement to help you categorize your expenses.
2. Balance Your Bank Accounts and Credit Cards
Another critical accounting tip for the year-end is to ensure that your financial statements match up with your bank and credit card accounts, as well as your year-end statements.
If you’re using online accounting software, make sure that your ledger balance matches too.
3. Get Your Shoebox Organized
Are you the type of person who keeps your business receipts in a glove box, shoe box, or drawer? If so, it’s definitely time to upgrade your organizational system!
To keep on top of things in the new year, you should separate all your expense receipts into categories, then tally each category. By organizing your piles of receipts as you go instead of keeping them in a big jumbled mess, both you and your accountant will be much happier around tax time.
Of course, this is easier said than done. Even the best organizational system can break down, every now and then. Whether you use cloud-based accounting software or stubbornly cling to the shoebox system, if you find yourself with unrecorded transactions by the end of the year, then now is the time to get organized.
Bonus Tip: Be sure to copy down your thermal receipts as they tend to fade over time.
4. Get on Top of Your Accounts Receivable
Did you know CB Insights found that up to 29 percent of startups fail due to cash crises? That’s why, before the year is over, you should try to close out all outstanding receivables.
You should aim to collect all unpaid invoices and reissue or void checks as necessary by the end of the year. By cleaning up reconciliation issues and collecting as much as possible, you’ll be able to maintain better control of your company’s cash flow. Expediting payments before taxes are due will also be a big help.
5. Take Physical Inventory
If you’re running a service-based business, you probably don’t need to take physical inventory. But for those who run a product-based business, it’s crucial to get an accurate account of your inventory before the year ends.
Make sure to match your inventory with your end-of-year balance sheet. Knowing how much you’ve spent on inventory throughout the year and its current value will also greatly help your bookkeeper.
6. Asses Your Accounting Practices
The start of a new year is the perfect time to reconsider whether the accounting system you’ve been using all year has done the job.
Ask yourself the following questions:
- Have I been able to input all the financial data I need to track?
- Have I gotten the financial information I need to make informed decisions and fulfill all tax and government requirements?
If you answered “no” to any of these questions, then it’s time to implement some changes to your accounting system.
You may need to consider hiring more staff to handle data entry, or maybe it’s time to try a different accounting software solution.
No matter what the issue is, if you take the time to resolve it now, you’ll ensure that your business continues to grow and succeed in the year to come.
7. Take Time to Look Back and Plan Forward
The end of November is a great time to review the past year’s performance and stack the results up against your preset goals and milestones. You can then use this information to help you judge the viability of your upcoming year’s objectives.
Pull out your original business plan, objectives, and/or action plans, then start to revise them by setting new goals and action plans for the future. Making visual and tangible financial goals at year’s end can be a useful guide for where you want your business’ books to go over the next 12 months. If you do this now instead of waiting until December 31st, you’ll have a jumpstart on your new plans as soon as the New Year begins. This will help make your next fiscal year even more profitable.
Every emerging company wants to grow, but many don’t establish the procedures that are required to make growth happen. So, take action before the end of the year and tick these procedures off your checklist. Not only will this help your business scale, but you’ll also be better prepared when tax time rolls around.
We Can Help
If you’re feeling overwhelmed trying to get your business ready for the holidays and New Years, don’t worry! An accountant can really help!
If you find that you don’t have the time, need a second pair of eyes, or would like a more detailed review of what all the numbers mean, we’d be more than happy to work with you!
Get in touch with us today! We’ll help review your financial position and make sure your business is prepared for the end of the year.