As we near the end of another year, I thought it would be good to give out a list of the top 10 financially-related things to do at year-end for a small business. Don’t be too stressed if you don’t do all of this in December. You can always start doing them in the new year. Just pick one thing to do and start small. I am going to do numbers 6-10 in this article, and the final 5 next time.
10. Thank Clients and Employees
We need to celebrate our wins, and thank the people who helped us this year. Of course, it is always good to thank clients for their business with a card and/or gift. For some of us, this is not something that comes easy. I say delegate it if you can, but if not, don’t make it too complicated. I definitely believe the thought is worth something. If you are a creative person, then go for it and maybe your gift will be memorable.
I also think that thanking employees and even contractors is an excellent idea. I know it is common to have a Christmas Party or perhaps a bonus, but even writing a little note to them can go a long way. For a small organization, going to lunch can be a good way to celebrate. Nobody can be successful alone. It is always good to recognize those who have helped you this year and will help to launch you into the new year in the right direction.
9. Clean Up Your Books
I am a fan of having clean and consistent books throughout the year, but at year-end, you have to do a bit more. If you are a company that is months behind on reconciling bank and credit card statements or have no idea how you are doing financially, I would suggest getting a bookkeeping firm to help. You want to start the new year knowing how you are doing. You might want to pay out bonuses or give promotions. How can you do this without financials? You are going to have to do it for taxes, the bank, or even investors, so why not get it done so you can use this to run your business and make good financial decisions? Get some peace of mind, and clean up your books.
8. Prepare for 1099s and W2s
If you have been in business long, you know that you have to send out 1099s to contractors and W-2s to employees. You want to make sure you have the appropriate W-9 for contractors and vendors and W-4 for employees. Be sure you have the correct address on file so you can send them easily and quickly. If you use an accounting system like QuickBooks, you can run a 1099 report to make sure you have the information needed to meet your deadlines.
7. Tax Planning
If you are a company that files your return on a cash basis, then it will be good to discuss with a tax CPA a strategy that may help you reduce taxes. For example, if you have a profitable year and you have the cash, it may be in your best interest to pay some vendors early or make investments in equipment, computers, marketing, etc. On the other hand, if you think this is not an issue, you can delay payments to next year. It all depends on where you are financially, which makes cleaning up your books even more important. You also have until you file your taxes to make contributions to retirement accounts that could provide a tax benefit depending on the type of account. A financial advisor can help here.
6. Be Healthy
So you might be wondering how being healthy can help you financially. In the book, The Power of Agency, the authors state that consistent and regular movement and healthy eating help you make better decisions and be more creative. This time of year, there is a tendency to sit more and eat worse. I am not suggesting you cut out all sugars and avoid all holiday parties. I am simply saying that eating these things in moderation is the key. Try to exercise every day for 20-30 minutes a day. Being mobile and standing every hour can really make a huge impact. We want to be thinking clearly so we can be ready for the next year and start out on the right foot.
5 Down and 5 To Go
Next week, we will continue this list for the final 5 things you should do at year-end to help you financially.