You did it! Another year as a small business owner is coming to a close. The end of the year might seem like a good time to sit back, relax, and enjoy a job well done, but not before checking just a few more boxes.
Small business owners have quite a few extra responsibilities at the end of the year. Be sure to complete all of them before you cut loose and celebrate!
End Of The Year Checklist: 8 Things Every Small Business Owner Should Do
Each month might feel like the one before when running your small business…until December rolls around. The end of the year brings 8 specific responsibilities for dutiful business owners. Be sure not to leave any out!
1. Make Sure Your Books Are Ready To Go
All business owners should collect and organize their records from the long year. For some, this task can be exhausting as you pull together every important scrap of paper that has crossed your desk over the past 12 months!
For more developed businesses, you might have a dedicated bookkeeper or need to find one to get the ball rolling.
2. Prepare All Of Your Tax Documents
This task also requires some shuffling around, as you will need to assemble all of your financial odds and ends to complete your taxes. Whether you complete your taxes on your own or solicit help from a tax professional, having the correct paperwork gathered usually falls on your shoulders!
What’s more, at the end of the year, your staff members may require tax documents from you depending on the type of work that they have done. In particular, you will likely need to send 1099-NEC forms to all of your contractors.
Forgetting to deliver tax documents to your team could have serious effects on your tax filings.
3. Maximize Your Tax Deductions By Using Extra Profit To Purchase Any (Necessary) Expenses At The End Of The Year
Take this time at the end of the year to view your profit dollars and put them to good use.
While saving your extra earnings for a rainy day might seem like a good idea, sometimes your cash overflow will inadvertently bump you into the next tax bracket. Instead, consider purchasing some new things for yourself or your team.
For example, purchasing new computers, printers, or other technology for your business at the end of the year means that you can deduct the cost of those items and avoid the income tax!
Spending a little bit of your hard-earned cash before the new year is a win-win! Just don’t go too overboard on this. Only use the extra earnings to purchase things you actually need. This isn’t an excuse for a frivolous shopping spree!
4. Create Your Profit and Loss Report (and Other Essential Financial Reports)
This step is important for your own records, as it tells a more complete story about your victories and defeats year after year. The strongest business owners keep a close eye on what works and what hasn’t for their businesses.
Profit and loss reports paint a clear picture of money coming in versus money going out, which helps you plan and prepare to make a greater profit the following year. While it’s a little time-consuming to create these reports, it’s super important to finish this step before January comes knocking!
5. Reflect On This Year’s Financial Status and Accomplishments
This dedicated thinking time is non-negotiable for proud entrepreneurs. After you have taken the time to collect your data and paperwork at the end of the year, the natural next step is to reflect on how you did.
During the reflection process, write out some of your ideas. What regrets or goals come up when sorting through the rubble of the last 12 months? Fix your mistakes and aim even higher next year!
6. Figure Out If You’re Going To Offer Year-End Bonuses
Once all of your budgetary business is handled—expenses paid, taxes accounted for, and necessary purchases in the queue—you can decide how much bonus money is available for your team at the end of the year.
For many, extra pay in the month of December helps with holiday celebrations and boosts morale during an otherwise dark, cold, and uncomfortable season.
Of course, you must also consider your team members’ work to decide who earned a monetary bonus (and how much they should receive).
7. Make Sure To Back Up Your Financial Files and Data
You don’t want all of your hard work to be lost in the future, so take the time to duplicate, save, and even print hard copies of important records before closing out at the end of the year.
Since there are so many convenient ways to back up your files via the Internet or simple software, this step shouldn’t be the most time-consuming. But don’t put it off to interfere with your fresh start come the new year!
8. Create A Plan For Next Year
Your final step at the end of the year should be to plan for the next one. There’s no better time to improve your business than after crunching your numbers and thinking carefully about your annual cycle.
- Will additional team members help things flow better?
- Is new equipment or a new advertising strategy necessary moving forward?
- How can you streamline and reduce expenses?
Write down your ambitions for the future and create a plan to share with your team!
The end of the year is not only a necessary time to focus on the financial health of your small business, but an exciting checkpoint for reflecting and goal-setting.
Each year that you spend as an entrepreneur is filled with challenges, but those challenges can be made easier with strategic planning and organization during the month of December. Embrace the process and truly celebrate your business success before January arrives.