As the year winds down, small business owners should start preparing for a smooth transition into the new year. While focusing solely on future goals is tempting, properly closing out the current year is essential for long-term success. A well-structured year-end checklist ensures your business is ready for tax season and provides the clarity you need to refine your strategies for the coming year. Here’s a comprehensive guide to help you wrap up your year efficiently. Wrap up your year early so that you can enjoy all the year has left over and be ready to present your future self with a huge leg up.
I like to think about my future self and how I can make her life easier. The paperwork, tax preparation, and organizing of documents are my least favorite things to do. I like to see positive numbers on a balance sheet after it’s all done, but I’ll pay someone any amount of money to do my overall paperwork. QuickBooks and other accounting software make managing it much easier, meaning my future self has something to enjoy and not dread in the new year. Set yourself and your business up for next year’s success by finishing this year-end checklist before December.
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- Review Financial Statements
Your financial records are the foundation of your business, and year-end is the perfect time to ensure everything is in order. Review your balance sheet, profit and loss, and cash flow statement. Compare these against your yearly goals to identify areas where you’ve excelled or need improvement. This financial health check also helps ensure that all transactions have been recorded correctly and that any discrepancies can be addressed before closing the books. This is also an excellent time to determine any goal shortfalls to add to next year’s goals. I like to look over my goals during this time.
- Reconcile Bank and Credit Card Accounts
Reconcile your bank and credit card statements with your accounting software to ensure that every expense and deposit has been recorded correctly. This process can help you catch any mistakes or missing transactions before the books are finalized. It’s also a great time to resolve any outstanding payments, clear up unpaid invoices, and make sure your business accounts are accurate. Sort out 1099s for contractors and any other details that are due at the end of January for people you have worked with.
- Organize Tax Documents
Staying organized with your tax documents is crucial for a stress-free tax season. Ensure you have all the necessary records, including income statements, expense receipts, payroll documents, and any other forms required for filing taxes. If you’re working with an accountant, this is an excellent time to schedule a meeting to confirm you’re on the same page with any tax planning strategies. November isn’t a super busy time of the year for accountants, so it’s a perfect time to meet with them about what’s needed for tax season.
- Evaluate Inventory Levels
For businesses that sell products, a year-end inventory evaluation is vital. Conduct a physical inventory count and compare it with your records to adjust for discrepancies. Assess which products are overstocked or underperforming and use this data to inform your purchasing decisions for the upcoming year. Additionally, clearing out old stock through sales promotions can help boost your year-end revenue while reducing excess inventory. Keep track of what’s not moving to determine if those products are worth stocking.
If you don’t have physical inventory, maybe you sell products for others, like I do. October and November are good times to contact customers about next year’s budgets, their plans, and what needs to be added to their budgets. Being involved early in the purchasing process puts you ahead of your competition.
- Review Your Payroll and Employee Benefits
The year-end is an opportunity to review payroll and employee benefits to ensure compliance with tax and labor laws. Verify that all wages, bonuses, and benefits are correctly recorded. This is also a great time to review employee performance and consider salary adjustments, promotions, or benefits changes for the new year. This is also a time to consider the people you work with. I love holiday bonuses; they are fabulous for morale when going into the new year. Even outsourcing partners and contractors deserve that extra something to show appreciation for a great year.
- Reassess Business Goals and KPIs
Take the time to review your business goals and key performance indicators (KPIs) from the past year. How well did your business meet its objectives? What areas require improvement? Use this reflection to set realistic and measurable goals for the upcoming year. This is also an opportunity to adjust your business strategy based on current market conditions, customer feedback, and industry trends. Take this time for reflection somewhere you think well. I would go somewhere that makes me happy and at peace with a notebook to think about what goals I accomplished and which ones I fell short on. This is easy if you keep track of goals throughout the year with quarterly goal reviews and a mid-year goal assessment. Make sure your goals are SMART.
- Plan for Tax Deductions and Credits
The end of the year is the final opportunity to take advantage of tax deductions and credits that benefit your business. Consider deductions for business expenses such as office supplies, equipment, and travel. Additionally, if you made charitable contributions or invested in energy-efficient upgrades for your business, these may qualify for tax credits. Consult with your accountant to identify any other potential savings. This should be a line item to discuss on that meeting with your accountant before the second week of December. Accounting software like QuickBooks will make keeping track of deductions throughout the year much easier than spreadsheets and envelopes. Future-proof your business with QuickBooks.
- Update Licenses, Permits, and Subscriptions
Check that all necessary business licenses and permits are up to date. Depending on your industry, renewing these documents may be required to keep your business compliant. In addition, review any software subscriptions or service contracts to ensure they’re still meeting your needs, and cancel or upgrade as necessary. Take an inventory of everything that you require so that you can set reminders for renewals and subscriptions. I put these reminders on my main calendar.
- Backup Important Data
Ensure that all critical business data is securely backed up at the end of the year. Whether you use cloud storage or physical backups, having up-to-date copies of your financial records, customer information, and other business data is crucial for safeguarding your operations in case of a system failure or cyberattack. This should be done a few times yearly, especially before year-end.
- Prepare for the New Year
Finally, set the tone for the upcoming year by organizing your calendar and outlining key projects and deadlines. Whether you’re launching a new product, expanding your marketing efforts, or upgrading your technology, a clear roadmap can keep your business on track and motivated. If you don’t have one yet, CRM (customer relationship management) software can help you stay organized.
The end of the year is a pivotal time for small businesses. By tackling this checklist, you ensure compliance and readiness for tax season and position your business for success in the new year. From financial audits to strategic planning, each step is designed to give you a fresh perspective and a solid foundation to build upon in the months ahead.
Make this year-end count, and your future self will thank you for it! Use QuickBooks all year long to help make your year-end and tax time much easier. Sign up with our affiliate link.
Year-end is a fabulous time to contemplate the year; preparing for your year-end will give you a head start on your new year for your best year ever. Review more business tools on our Business Tools Directory and make your end of the year as simple as possible, resulting in a fantastic new year. Subscribe for a weekly newsletter with the latest posts and some business tips here and there. Have a lovely day.
