Year End Planning
 

Your business’ year end (December 31st for most small businesses) is an important time to take stock of the past 12 months and begin preparing for the next business year. For most small businesses, this means filing their tax return.  This is also great opportunity to do some analysis and make some decisions to ensure that your business prospers over the coming year?

Here are several activities the small business owner/operator undertakes to prepare for their year end and plan for the upcoming year.

Ensure Your Financial Records are Compete

Many small businesses dread tax time, especially if you’ve not put in the appropriate time during the past 12 months.  Whatever the state of your record keeping, you have to complete this step before you can do anything else. This is often the one time a year many entrepreneurs call upon a bookkeeper to help them sort out their paperwork.  If not prepared, this this annual event can be extremely challenging and frustrating and likely very costly. 

Determine Your Financial Position

This is a perfect time to put your Management Reports to good use.  With the help of your accountant, you will be able to fully participate in your business’ financial planning and have a better understanding of the advice given.  If you miss this step, you are missing out on a valuable opportunity to advance your business’ success and growth.  Three important Management reports that your business should be working with on a monthly/quarterly basis, include:

  • The Balance Sheet is a summary of how your business is doing financially at a particular point in time. It shows all your business's assets, liabilities and equity.
  • The Income Statement lets you see at a glance whether or not your business is profitable at a particular point in time by itemizing your revenue and expenses, resulting in a profit or loss.
  • The Cash Flow Statement reconciles your opening cash with your closing cash for a particular period, showing you where the money has gone.

Your accountant can help you take this information and can provide valuable recommendations and action items to help improve your business model and perhaps greater growth and success.

Evaluation

Did you prepare a business plan when you first started your business?  If you are new business or even if you have been operating for several years, this is a good time to pull out your business plan and review it.  If you’ve spent some time with your accountant reviewing your financial position, you will have a better understanding of whether or not you have accomplished what you set out to do.  Did you stay focused on your original goals?  Did you put your time to good use?   What worked and what didn’t work? This is the time to regroup and get back to business, or revise your goals and objectives should they no longer fit your business model.

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