The end of the year is full of exciting opportunities for small businesses to meet their goals, including holiday shopping, community events, and…preparing for year-end accounting. Wait, what? While we know it doesn’t sound glamorous, preparing for year-end accounting is an important way to track and organize your finances, meet deadlines, and reflect on your goals for the coming year. In other words, it’s critical for the health of your business.
In this blog, we share how to prepare for year-end accounting—and how to make the process as easy as possible.
Count your inventory
Throughout the year, but especially at the end of the year, business owners should set aside time to count their physical inventory.
Ensuring your inventory count is accurate not only gives you a clear picture of your yearly income (or loss), it helps you make informed business decisions for the future. Even if you have a digitized system that tracks your inventory, we recommend doing a physical count of your inventory to avoid any discrepancies between your digital inventory record vs. your actual inventory.
Review any year-end expenses or sales
The end of the year can be an important time to make investments in your business—such as in new equipment, infrastructure, technology or more. You may be able to get tax benefits if you expense larger purchases before the end of the year; alternatively, it could be more beneficial to wait until the new year. It’s an important time to choose whether to push expenses to next year or make them this year so you can maximize the benefits for your business.
Prepare and process your year-end payroll
Year-end payroll involves the review and processing of employee wages, employee deductions, and your business’ federal, state, and local tax requirements and forms.
The year-end payroll period occurs from the last quarter of the year through the first quarter of the following year. For example, the end of January is the deadline for most payroll processes, such as sending tax forms to your employees and contractors (i.e., W-2, 1099, etc.), reporting payroll withholdings to the IRS, and submitting other tax documents. This year-end payroll checklist and guide provides a helpful overview of everything you’ll need to stay on track, but we recommend reaching out to our team for personalized assistance.
While preparing your year-end payroll may sound overwhelming, it’s a relatively simple process if you’ve maintained organized and accurate financial records throughout the year.
Reflect on the state of the business
The end of the year provides an important opportunity to reflect on the state of your business, including reviewing your goals, setting new ones, making projections for the upcoming year, and assessing whether the business is working for you and if you like where it’s going.
We firmly believe that the goal of a business isn’t only to turn a profit; it’s to share your passion with your community, develop a strong community, provide employees with stability, and more. Here are a few questions we suggest business owners ask themselves at the end of the year (and anytime, for that matter!):
Am I using my time in the way I want?
Am I reaching my personal and/or professional goals?
Am I happy? Are my employees happy?
Does my business help contribute to a vibrant local community?
Am I supporting the community in the way I want to?
Remember that year-end accounting doesn’t have to be stressful; it can be a reassuring and an inspiring reminder of the fantastic business you’ve built! If you have specific questions, or want to know how we can help manage your year-end accounting, reach out to our team.